Debt Retirement and Sinking Funds Notes to Financial Statements

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THE REGIONAL MUNICiPALITY OF PEEL DEBT RETIREMENT AND SINKING FUNDS
Statement of Change in Net Financial Assets
For the year ended December 31 (All dollars in $000)
Net change in fund balances
$
2012 2011
(2,181)
$
(2,147)
Change in net financial assets
(2,181) Net financial assets, beginning of year
12,322 14,469
Net financial assets, end of year
$
(2,147)
10,141 $12,322
The accompanying notes are an integral part of these consolidated financial statements.
The Regional Municipality of Peel DEBT RETIREMENT AND SINKING FUNDS
Notes to the Financial Statements
For the year ended December 31, 2012
1. Purpose of funds
The Region of Peel Debt Retirement Fund is a separate fund maintained for the purpose of providing periodic repayments of debt associated with
Debenture Series “AD” assumed by the Town of Caledon to be retired by means of debt retirement funds on hand with the Region and further
contributions from the Town of Caledon.
The Region of Peel Sinking Fund is a separate fund maintained for the purpose of providing periodic repayments for debt to be retired by means
of sinking funds.
2. Adoption of new accounting framework
During the year ended December 31, 2012, the Region of Peel Debt Retirement and Sinking Funds (the “Funds”) adopted public sector accounting (PSA)
standards as its new underlying accounting framework, including PS 1201 Financial Statement Presentation. Section PS 1201 establishes general reporting
principles and standards for disclosure of information in government financial statements.
The Funds have elected the option to transition to PSA Standards without applying the specific not-for-profit accounting standards in sections PS 4200
to 4270. Also, the Funds have elected to early adopt PS 3450, Financial Instruments. These standards have not been applied retroactively, as the standard
specifically prohibits retroactive application. There was no impact on the Funds’ financial statements as a result.
Impact of the adoption of the new standards
The adoption of the new standards had no impact on the statement of financial position as at December 31, 2011 or on the statement of financial activities
and fund balance for the year then ended.
A statement of cash flows and a statement of change in net financial assets have been prepared for the years ended December 31, 2012 and December 31,
2011 as a result of transition to the new accounting standards.
3. Summary of significant accounting policies
These financial statements are the representation of management and are prepared by management in accordance with Canadian public sector accounting
standards, as recommended by the Public Sector Accounting Board (“PSAB”) of the Canadian Institute of Chartered Accountants (“CICA”). The significant
accounting policies are summarized below:
(a) Basis of accounting
The Region of Peel Debt Retirement and Sinking Funds follow the accrual method of accounting for revenues and expenditures.
(b) Revenue recognition
Contributions are recognized in the year receivable. Investment income is recognized as revenue when earned.
(c) Investments
The short- and long-term investments are designated as held-to-maturity, and as such are recorded at amortized cost. Discounts on
zero-coupon bonds are amortized on a compound interest basis over the term of the investment. The discounts or premiums on any
coupon-bearing investment are amortized on a straight-line basis over the term of the investment.
Investment purchase is accounted for on the settlement date. There are no transaction costs incurred in the purchase of investments.
58
ANNUAL FINANCIAL REPORT
(d) Provision for actuarial requirements
The provision for actuarial requirements for the Sinking Fund represents the amounts required which, together with interest compounded
annually, will be sufficient to retire the related debt at maturity, based on contributions to the Sinking Fund to date. The actuarial
requirements were calculated using a rate of 4 per cent per annum on debt issued in 2010 and 4 per cent or 2.5 percent per annum on debt
issued in 2011 and thereafter. The excess or deficiency of financial assets over these requirements is included in the fund balance.
4. Allocation of surplus
In 2012, there was no surplus declared payable to the Regional Municipality of Peel by the Debt Retirement and Sinking Fund Committee
(2011 – $nil).
The following is the apportionment of the sinking fund balance reported in the statement of financial position.
Sinking Fund Surplus (Deficit)
Total
Town of Caledon
Region of Peel
Series DQ
$
(56)
1.1 %
98.9 %
Series EB
$
40
0.3%
99.7 %
$ (16)
2.8%
97.2 %
5.Contributions
In 2012, there were no contributions made to the Debt Retirement Fund (2011 – $nil). Contributions to the Sinking Fund were $16,762
(2011 – $8,915).
6. Financial instruments
The Debt Retirement Fund is subject to market risk and interest rate price risk with respect to its investment portfolio. The financial assets
of the Sinking Fund include cash and accrued interest only, and as such, were not subject to market risk or interest risk.
7. Principal repayment
Annual principal repayments for Debenture Series “AD” issued on behalf of the Town of Caledon over the next five years and thereafter are due
as follows:
(All dollars in $000)
2013
$
1,694
2014
1,804
2015 1,921
2016 2,046
2017 2,179
2018 and thereafter
10,815
Total
$
20,459
8. Investment portfolio
Short-term investments consist of two municipal bonds bearing an interest rate at 6.60 per cent maturing in December 2013.
Long-term investments consist of two municipal bonds bearing an interest rate at 4.90 per cent maturing in October and November 2014.
9. Excess over actuarial requirements
(All dollars in $000)
Consists of: Debt Retirement Fund
$
Sinking Fund
Total
2012
10,157
12,339
$
12,322
(16)
$
10,141
2011
$
(17)
REGION OF PEEL
59
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