HomeMy WebLinkAboutAudit Agenda - 2023-06-26Audit Committee
Agenda
Monday, June 26, 2023,6:00 p.m. - 7:00 p.m.
Council Chambers - Hybrid
City of Kitchener
200 King Street W, Kitchener, ON N2G 4G7
People interested in participating in this meeting can register online using the delegation registration
form at www.kitchener.ca/delegation or via email at delegation(a_kitchener.ca. Please refer to the
delegation section on the agenda below for registration in-person and electronic participation
deadlines. Written comments received will be circulated prior to the meeting and will form part of the
public record.
The meeting live -stream and archived videos are available at www. kitchener.ca/watchnow.
*Accessible formats and communication supports are available upon request. If you require
assistance to take part in a city meeting or event, please call 519-741-2345 or TTY 1-866-969-9994.*
Chair: Mayor B. Vrbanovic
Pages
1. Commencement
2. Disclosure of Pecuniary Interest and the General Nature Thereof
Members of Council and members of the City's local boards/committees are
required to file a written statement when they have a conflict of interest. If a
conflict is declared please visit www.kitchener.ca/conflict to submit your written
form.
3. Delegations
3.1 Item 4.1 - Matt Betik and Courtney Cheal, KPMG
4. Discussion Items
4.1 Audit Consolidated Financial Statements, FIN -2023-259 3
5. Status Updates
5.1 2nd Quarter Audit Status Report, CAO -2023-284
6. Adjournment
Mariah Black
Committee Administrator
238
Page 2 of 264
PREPARED BY: Greg Demacio, Manager, Financial Reporting and Analysis, 519-741-
2200 ext. 7895
WARD(S) INVOLVED: All
DATE OF REPORT: June 20, 2023
REPORT NO.: FIN -2023-259
SUBJECT: 2022 Audited Consolidated Financial Statements
RECOMMENDATION:
That the 2022 Audited Consolidated Financial Statements of the Corporation of the City
of Kitchener be approved.
REPORT HIGHLIGHTS:
• The purpose of this report is to present the Corporation of the City of Kitchener's
consolidated financial statements for the year ended December 31, 2022.
• The key finding of this report is that the independent auditors have completed the audit of
the consolidated financial statements, with the exception of certain remaining outstanding
procedures as noted in the Audit Findings Report. The auditors have provided a draft
Independent Auditor's Report expressing an unqualified audit opinion based on their
completed procedures to date.
• There are no financial implications associated with this report.
• Community engagement included having this report posted to the City's website with the
agenda in advance of the committee meeting.
• This report supports the delivery of core services.
BACKGROUND:
Staff is pleased to submit the 2022 Audited Consolidated Financial Statements of the
Corporation of the City of Kitchener. A presentation of financial highlights for the year will be
given at the Audit Committee meeting on June 26, 2023. Representatives of the City's external
auditors will also be in attendance to discuss the Audit Findings Report.
REPORT:
The consolidated financial statements are prepared in accordance with Canadian generally
accepted accounting principles for local governments as established by the Public Sector
Accounting Board of the Chartered Professional Accountants of Canada. These financial
statements are prepared on a full accrual basis and combine the results of the tax -based
operations, enterprises, local boards, capital activity, and reserve fund activities. Local boards
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 3 of 264
Staff Report
Tc Il.,ISI°°'R
Financial Services Department
www.kitchener.ca
REPORT TO: Audit Committee
DATE OF MEETING: June 26, 2023
SUBMITTED BY: Greg Demacio, Manager, Financial Reporting and Analysis, 519-741-
2200 ext. 7895
PREPARED BY: Greg Demacio, Manager, Financial Reporting and Analysis, 519-741-
2200 ext. 7895
WARD(S) INVOLVED: All
DATE OF REPORT: June 20, 2023
REPORT NO.: FIN -2023-259
SUBJECT: 2022 Audited Consolidated Financial Statements
RECOMMENDATION:
That the 2022 Audited Consolidated Financial Statements of the Corporation of the City
of Kitchener be approved.
REPORT HIGHLIGHTS:
• The purpose of this report is to present the Corporation of the City of Kitchener's
consolidated financial statements for the year ended December 31, 2022.
• The key finding of this report is that the independent auditors have completed the audit of
the consolidated financial statements, with the exception of certain remaining outstanding
procedures as noted in the Audit Findings Report. The auditors have provided a draft
Independent Auditor's Report expressing an unqualified audit opinion based on their
completed procedures to date.
• There are no financial implications associated with this report.
• Community engagement included having this report posted to the City's website with the
agenda in advance of the committee meeting.
• This report supports the delivery of core services.
BACKGROUND:
Staff is pleased to submit the 2022 Audited Consolidated Financial Statements of the
Corporation of the City of Kitchener. A presentation of financial highlights for the year will be
given at the Audit Committee meeting on June 26, 2023. Representatives of the City's external
auditors will also be in attendance to discuss the Audit Findings Report.
REPORT:
The consolidated financial statements are prepared in accordance with Canadian generally
accepted accounting principles for local governments as established by the Public Sector
Accounting Board of the Chartered Professional Accountants of Canada. These financial
statements are prepared on a full accrual basis and combine the results of the tax -based
operations, enterprises, local boards, capital activity, and reserve fund activities. Local boards
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 3 of 264
include The Centre in the Square Inc., Kitchener Public Library, Belmont Improvement Area, and
Kitchener Downtown Improvement Area. The 2022 year-end results for the tax -based operations
and the enterprises were provided to Council in March. Please see Attachment A to this report
for a reconciliation between the non -consolidated figures provided in March and the Audited
Consolidated Financial Statements.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget — The recommendation has no impact on the Capital Budget.
Operating Budget — The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
• FIN -2022-520 External Audit Planning Report for Fiscal Year 2022
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services
ATTACHMENTS:
• Attachment A —Annual Surplus Reconciliation
• Attachment B —City of Kitchener Financial Report Excerpts (including the Audited
Consolidated Financial Statements) for the year ended December 31, 2022
• Attachment C —Audit Committee Presentation
• Attachment D —Audit Findings Report for the year ended December 31, 2022 (KPMG)
Page 4 of 264
Reconciliation of Operating Surplus to Consolidated Annual Surplus
Year Ended Dec 31, Year Ended Dec 31,
Revenues not included in operating surplus
Gain on dilution from prior interest in Kitchener Power Corp. and its affiliates
2022
2021
Tax supported surplus (deficit)
11234,927
(4,651,262)
Enterprise surplus (deficit)
69037,951
3,258,158
Total operating surplus (deficit)
7,272,878
(1,393,104)
Consolidation
10,1353022
9,301,408
Belmont Improvement Area
(43668)
75222
Kitchener Downtown Improvement Area
913733
773,160
Kitchener Public Library
(3483497)
(199,715)
The Centre in the Square
2,731,674
(105,580)
Kitchener Generation Corporation
49,318
641114
Enova Energy Corporation
10,870,521
10,327,388
Amortization of tangible capital assets
139390,081
10,866,589
Revenues not included in operating surplus
Gain on dilution from prior interest in Kitchener Power Corp. and its affiliates
7132883452
-
Reserve fund revenue
4337493511
42,290,841
Contributions of tangible capital assets
2031573534
23,914,606
Gain (loss) on sale of tangible capital assets
(137979776)
(102,564)
Other capital revenue
10,1353022
9,301,408
143,5323743
75,404,291
Items in operating surplus, not in consolidated statements
Net transfers to capital and reserves
9237303228
89,251,020
Various PSAB adjustments
319753051
45438,141
9637053279
93,689,161
COK expenses not included in operating surplus
Amortization of tangible capital assets
(5430983524)
(53,172,804)
Other capital expenses
(2136263744)
(17,977,556)
Change in actuarial estimate for employee future benefits
(415,195)
26,656
Reserve fund expenses
(41128,026)
(1,915,486)
(8032683490)
(73,039,191)
Annual surplus per consolidated financial statements
180,632,491
105,527,746
Page 5 of 264
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener, ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
Opinion
• the consolidated s
• the consolidat instate
• the consolidated
• and s to t
ac ting polici
(Herein af ferred
M
of o ,,'°tions for the year then ended
ha in net financial assets for the year then ended
ent of cash flows for the year then ended
ted financial statements, including a summary of significant
s the "consolidated financial statements").
In our opinion, th , Fbccompanying consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Entity as at December 31,
2022, and its consolidated results of operations, its changes in consolidated net financial
assets, and its consolidated cash flows for the year then ended in accordance with
Canadian public sector accounting standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Consolidated Financial Statements"
section of our auditor's report.
KIIL°IllNAIII ��� I...° aii,i ��..0 hark) Ill�rr� iof,,,:���i�d III���r�WuV°��� 14 ���wut�ners�r pig ��:��rl�,l rut1111��r��nlP�r������r ��iurun�n ����rl U�1111l , IIIA � Ilr �.:3 g o w,i)r g ��l ruui a cini li��)III uin ii� p e �u1�.evut
r lrllrfl�l. iler
5i rrru aIl„° h�,!�:Iited ���h rte"ratJon� al ,a rrqi�fl..r.�'u.is h corurupar„ uHrunu11��..�d .!�� ��i��rVe.
ry:rru r :r IV's n:r,r.n a, W 10: h
Page 6 of 264
Page 2
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Canada and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance
for the Consolidated Financial Statements
Management is responsible for the preparation resentation of the consolidated
financial statements in accordance with Cana � public foi
accounting standards and
for such internal control as managem determines ecessary to enable the
preparation of consolidated financial st ntllllllllllll�t are freem material misstatement,
whether due to fraud or error.
In preparing the consolidated cial sta ents, management is responsible for
assessing the Entity's ability to a g concern, disclosing as applicable,
matters related to going concern a oing concern basis of accounting unless
management either i liq e the Entity or to cease operations, or has no
realistic alternative eod o
Those charged wit16 1 responsible for overseeing the Entity's financial
reporting pr ,,,,
Audit s Resp "bilies for the Audit of the Consolidated Financial
Statem s 1
Our objective§RWto obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional skepticism throughout the
audit.
Page 7 of 264
Page 3
We also:
• Identify and assess the risks of material misstatement of the consolidated 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 collusi �,,,,n, forgery, intentional omissions,
misrepresentations, or the override of internal con
Obtain an understanding of internal controli� 44 to the audit in order to design
audit procedures that are appropriate in tl p,circums s, but not for the purpose of
ma use the En to cease to continue as a going concern.
Evaluatov °'I presentation, structure and content of the consolidated financial
statements, ding the disclosures, and whether the consolidated 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.
Page 8 of 264
g11PnaLTMAIALIMA
Page 4
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group Entity to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit
opinion.
Page 9 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Consolidated Statement of Financial Position
As at December 31, 2022
2022 2021
Financial assets
4P1111111010
Cash and cash equivalents
$ 113,0659078 $
1117256,413
Taxes receivable (Note 2)
25,0769645
227423,158
Trade and other accounts receivable (Note 2)
751530,531
52,8367081
Loans receivable (Note 5)
5,994,236
61126,258
Inventory for resale
9,956,554
1377281401
Investments (Note 6)
229,381,003
21970491058
Investment in Enova Energy Corporation (Note 7)
306,970,957
23172411809
Investment in Kitchener Generation Corporation Note 8
118589014
27090,266
767.833.018
658.751.444
Liabilities
4P1111111010
Accounts payable and accrued liabilities
132,650,726
1092127,802
Deferred revenue -obligatory reserve funds (Note 10)
21750,528
83,114,403
Deferred revenue -other
Illu '
71908,681
4277221904
Municipal debt (Note 11)
�
IIIIII���������IIIIIIII
57,724,950
597962,275
Employee future benefits Note 13
���
541650,290
54,235,095
355,6859175
3497162,479
Net financial assets
412,1479843
3097588,965
Non-financial assets
Tangible capital assets (Note 14)
Inventory of supplies
Prepaid expenses
Accumulated surplus (N
114671695,615
3,689,246
2,298,465
1,473,683,326
$ 1.885.831.169
The accompanying notes are an ral t of these consolidated financial statements.
1738976347219
3,999,201
1,976,293
1, 395, 609, 713
$ 1770571987678
Page 10 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Consolidated Statement of Operations
For the Year Ended December 31, 2022
Revenue
Taxation
User fees and charges
Gasworks
Water, sewer and storm water
Other
Government transfers
Contributions of tangible capital assets
Investment income
Penalties and interest on taxes
Development charge revenue recognized
Share of net income of Enova Energy Corporation
(Note 7)
Gain on dilution from prior interest in Kitchener Power
Corp. and its affiliates (Note 7)
Share of net income of Kitchener Generation
Corporation (Note 8)
Other
Total revenue���������J������e
2022 2022 2021
Budget
$ 143,9659701 $ 14457469539 $ 13779491,043
86,122,269
135115281,005
43,950,692
27,999,550
20,157,534
7,650,4E
31348
15,21 13
95,397,822
1431,6361,140
41,389,583
25,852,681
20,157,534
10,290,584
4,087,007
27,600,867
79,217,208
13872711884
30, 682,192
25,443,264
237 914, 606
6,577,291
31783,814
21,836,143
Expenses
Generalovernment°°
g
� Dll
46,132,803
38,310,563
34,604,817
Protection services
56,706,841
5614431,685
5674411084
Transportation services
44,1 70,722
4257231,395
39,002,183
Environmental services
106,373,86E
10515461,179
997840,274
Health services
IN
21652,111
2,811,452
37842,758
Social and family services
21866,525
216139823
27234,620
Recreation and cultural service
81,882,46E
82,0589805
697607,865
Planning and development
1656399323
1852479365
1177771,358
Gasworks
6732461,826
715255,005
5923257103
Total expenses
424,671,485
420,010,272
376,6761062
Annual surplus
1441,820,556
180,632,491
10575271746
Accumulated surplus, beginning
of year
11705,198,678
11705,198,678
1759976707932
Accumulated surplus, end of
year (Note 15) $
11850,019,234
$ 1,885,831,169
$ 177057198,678
The accompanying notes are an integral part of these consolidated financial statements.
Page 11 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Consolidated Statement of Change in Net Financial Assets
For the Year Ended December 31, 2022
2022 2022 2021
Budget
Annual surplus
$ 144,8209556 $
180,6329491 $
1057527,746
Amortization of tangible capital assets
56,6289375
56,6289375
557588,593
Acquisition of tangible capital assets
(991302,508)
(135,277,969)
(122,2387702)
Gain on disposals of tangible capital assets
(39905,892)
(39905,892)
(900,085)
Proceeds on disposal of tangible capital assets
4,494,090
4,494,090
179161825
Acquisition of inventory of supplies
-
(89140,732)
(77155,383)
Acquisition of prepaid expenses
-
(1,827,271)
(1,906,707)
Consumption of inventory of supplies
-
814509687
67674,597
Use of prepaid expenses
115059099
17796,008
Change in net financial assets
102,734
102,5589878
397302,892
Net financial assets, beginning of ear
30 9,5 , 65
3091588,965
270,286,073
Net financial assets, end of year
$ 41 23,586 $q%412,147,843
$
309,588,965
The accompanying notes are an integral part of these con sol id' ,,, ,fli�,�(I� Y°racial statements.
Page 12 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Consolidated Statement of Cash Flow
For the Year Ended December 31, 2022
es
°aaoa0000GOGOGOGG0���0�
hener Generation Corporation
118,292,884
15478797647
61429,825
2022
2021
Operating
10,331,945)
(89,231,985
Annual surplus $
180,6325491 $
1057527,746
Items not involving cash
11808,665
(29,200,096)
Amortization of tangible capital assets
563628,375
55,588,593
Gain on disposals of tangible capital assets
(3,905,892)
(9005085)
Share of net income of Enova Energy Corporation
(10,870,521)
(1073271388)
Gain on dilution from prior interest in Kitchener Power Corp. and its affiliates
(719288,452)
-
Share of net income of Kitchener Generation Corporation
(49,318)
(64,114)
Change in employee future benefits
4159195
(26,656)
Contributions of tangible capital assets
(209157,534)
(23)9141606)
Change in non-cash assets and liabilities
Taxes receivable
(29653,487)
(46,650)
Trade and other accounts receivable
(229694,450)
(17,3215420)
Loans receivables
132,022
1631576
Inventory for resale � Q���
�3,771,847
(30,132)
Inventory of supplies
309,955
(480,786)
Prepaid expenses
(322,172)
(110,699)
Accounts payable and accrued liabilities ���llllli,
23,522,923
17926,517
Deferred revenue -obligatory reserve funds o
(363,875)
227436,744
Deferred revenue -other
149814,223
2274591007
es
°aaoa0000GOGOGOGG0���0�
hener Generation Corporation
118,292,884
15478797647
61429,825
470451600
281, 570
2901762
10,331,945)
(89,231,985
(396209550)
(84,8955623
Financing I IV
Municipal debt issued 11,4909000 87069,000
Municipal debt repaid (13,727,325) (10,845,849)
Net change in cash from financing activities (2,237,325) (2,7765849)
Capital
Acquisition of tangible capital assets
(115,120,434)
(987324,096)
Proceeds on disposal of tangible capital assets
41494,090
179161825
Net change in cash from capital activities
(110,626,344)
(96,4071271)
Net change in cash and cash equivalents
11808,665
(29,200,096)
Cash and cash equivalents, beginning of year
11112569413
14074561509
Cash and cash equivalents, end of year
$ 1133065,078 $
1117256,413
The accompanying notes are an integral part of these consolidated financial statements.
Page 13 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
On June 9, 1912 the village of Berlin was officially designated a city. The Corporation of the City of Kitchener
(the "City") was created in 1916 when Berlin changed its name to Kitchener. The City operates as a lower tier
government in the Province of Ontario, Canada. The City provides municipal services such as fire protection,
public works, gas distribution, urban planning, recreation and cultural services and other general government
services.
1. Summary of significant accounting policies
These consolidated financial statements of the City have been prepared by management in accordance with
Canadian generally accepted accounting principles for local governments as established by the Public Sector
Accounting Board of the Chartered Professional Accountants of Canada. The following is a summary of the
significant accounting policies followed in the preparation of these financi I statements:
a. Basis of consolidation
i. Consolidated entities
These consolidated financial statements reflect ass ts, liabilititw, reserves, surpluses/deficits,
revenues, and expenditures of those City funds ove ental functions or entities which have been
determined to comprise a part of the aggregate Cit ions based upon control exercised by the City
except for the City's government busines s which ccounted for on the modified equity basis of
accounting. The following boards, mu terpn and utilities have been included in the
consolidated financial statements:
• Kitchener Public Library
• Kitchener Downtown Impro rea rd of Management
• Belmont Improvement A oar f Man ment
• The Centre in the Squ C.
• Waterworks Enterprise
Gasworks Enter
• Sewer Surch Enter
• Storm Wat nagemen terprise
• Building Enter
• Golf Enterprise
• Parking Enterprise
All inter -organizational and inter -fund transactions and balances have been eliminated.
ii. Government business enterprises
Enova Energy Corporation and Kitchener Generation Corporation are not consolidated but are accounted
for on the modified equity basis which reflects the City of Kitchener's investment in the enterprises and its
share of net income since acquisition. Under the modified equity basis, the enterprises' accounting
principles are not adjusted to conform to those of the City, and inter -organizational transactions and
balances are not eliminated.
iii. Accounting for region and school board transactions
The taxation, other revenue, expenditures, assets and liabilities, with respect to the operations of the
school boards and the Regional Municipality of Waterloo, are not reflected in these consolidated financial
statements.
Page 14 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies (continued)
a. Basis of consolidation (continued)
iv. Trust funds
Trust funds and their related operations administered by the City are not consolidated (see Note 4).
b. Basis of accounting
i. Accrual basis of accounting
The consolidated financial statements are prepared using th crual basis of accounting. The accrual
th
basis of accounting recognizes revenues in the period in transactions or events occurred that
i t Ak
gave rise to the revenues. Expenses are recognized n ,h perio goods and services are acquired
and a liability is incurred or when an external transfer i ��"e
ii. Cash and cash equivalents UP111"
Cash and cash equivalents include cash on hand an liquid investments with original maturity of
90 days or less as at the end of the year. 4111
iii. Trade and other accounts receivable
Trade and other accounts recej e repo of any allowance for doubtful accounts.
iv. Loans receivable
Loans receivable are ne ny allowance for doubtful accounts. Interest income is recorded as
it accrues. When value ny receivable is identified as impaired, an allowance is set up to
offset the carryi mount an ny a justments are included in materials and services expense in the
period the impair is recogn d.
v. Inventory for resa
Inventory for resale is valued at the lower of cost or net realizable value on an average cost basis.
vi. Investments
Portfolio investments are carried at cost, net of accumulated amortization on premiums and discounts.
Premiums and discounts are amortized on a straight line basis over the term to maturity. Interest income
is recorded as it accrues. When the value of any portfolio investment is identified as impaired, the
carrying amount is adjusted to the estimated realizable amount and any adjustments are included in
investment income in the period the impairment is recognized.
Page 15 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies (continued)
b. Basis of accounting (continued)
vii. Deferred revenue
Government transfers, contributions and other amounts are received from third parties pursuant to
legislation, regulation or agreement and may only be used in the conduct of certain programs, in the
completion of specific work or for the purchase of tangible capital assets. A requirement of the Public
Sector Accounting Board of the Chartered Professional Accountants of Canada is that obligatory
reserves be reported as deferred revenue. Obligatory reserves include development charges, the
Canada Community -Building Fund, building permits, and recr ional land. In addition, certain user
charges and fees are collected for which the related servi ave yet to be performed. These are
recorded under the classification Deferred revenue - other. a is recognized in the period when the
related expenses are incurred, services performed or the t gible ital assets are acquired.
viii. Employee future benefits
The contributions to a multi-employer, defined ben n plan are expensed when contributions are
due. The costs of post-retirement benefits are re ized when the event that obligates the City
occurs. Costs include projected future inc ment alth care continuation costs and fees paid to
independent administrators of these plans, Ic n a sent value basis.
x. Non-financial assets
Non-financial assets are not available to discharge liabilities and are held for use in the provision of
services. They have useful lives that extend beyond the current year and are not intended for sale in the
ordinary course of operations. The change in non-financial assets during the year, together with the
excess of revenues over expenses, provides the consolidated change in net financial assets for the year.
Page 16 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies (continued)
b. Basis of accounting (continued)
x. Non-financial assets (continued)
a. Tangible capital assets
Tangible capital assets are recorded at cost which includes all amounts that are directly attributable
to acquisition, construction, development or betterment of the asset. The cost less residual value of
the tangible capital assets is amortized on a straight-line basis over their estimated useful lives as
follows:
Assets Amortizat' eriod
Land
Land Improvements
Buildings & building improvements
Leasehold improvements
Machinery & equipment
Computer hardware
Computer software
Linear assets
Vehicles
1 to 1" ars
to '° ears
5 to 100 years
5 to 16 vears
Page 17 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies (continued)
b. Basis of accounting (continued)
xi. Revenue recognition
Revenues are recognized in the period in which the transactions or events occurred that gave rise to the
revenues. All revenues are recorded on an accrual basis, except when the accruals cannot be
determined with a reasonable degree of certainty or when their estimation is impracticable.
Government transfers are recognized as revenues when the transfer is authorized and any eligibility
criteria are met, except to the extent that transfer stipulaXreve
'rise to an obligation that meets the
definition of a liability. Transfers are recorded as deferredhen transfer stipulations give rise to
a liability. Transfer revenue is recognized in the statemetions as the stipulation liabilities are
settled.
Government transfers, contributions and other am�Js are reNco�!ct
rom third parties pursuant to
legislation, regulation, or agreement and may onl use in th
of certain programs, in the
completion of specific work, or the purchase of t 'ble al asset. In addition, certain user charges
and fees are collected for which the related services et to be performed. Revenue is recognized in
the period when the related expenses a incurred, ices performed, or the tangible assets are
acquired. �i�rl, Ill�ii�
Tax revenue is recognized when it is author q��i 1ii1"°'°i period for which the tax is levied. Tax revenue
r�,
reported relates
xii. Use of esti
2. Taxes and accounts receivable
jement to make estimates and assumptions
disclosure of contingent assets and liabilities
counts of revenues and expenses during the
oyee future benefits payable, legal claims
ingible capital assets and their related useful
information and judgment and may differ
Taxes receivable are reported net of a valuation allowance of $10,071,810 (2021 - $9,321,997). Trade and
other accounts receivable are reported net of a valuation allowance of $1,531,662 (2021 - $1,283,294).
Page 18 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
3. Operations of school boards and the Regional Municipality of Waterloo
Further to Note 1 a) iii, the taxation, other revenues and requisitions for the school boards and the Regional
Municipality of Waterloo are comprised of the following:
4. Trust funds
Trust funds administered by the City have not been incl in the olidated Statement of Financial
Position, nor have their operations been included in the olidat d Statern of Operations. The trust funds
under administration are comprised of cemetery p tualoFf�e and prepaid interment funds totalling
$1813131775 (2021 - $17,616,272).
5. Loans receivable
Loans receivable are made up of the following:
2022 2021
Major capital improvement loans r a
$ 5,832,783 $ 51929,891
Loans receivable with forgiv ro ns 25,396 25,396
Minor capital improveme d o oa ceivable 136,057 170,971
Illp",
$ 5,9949236 $ 67126,258_
d
Major capital improvemeEn ns are ividual loans in excess of $500,000 when issued with no forgiveness
provision built into the loan. J)W ns have repayment terms ranging from 10 to 12 years (2021 - 10 to 12
years). All major capital improro nt loans are unsecured and bear interest at rates ranging from 1.32% to
4.10% (2021 - 1.32% to 2.95%).
Forgivable loans are those initially offered with forgiveness provisions built into the agreement. All loans in this
category are unsecured and have repayment terms of 5 years (2021 - 5 years). The forgiveness provisions are
15% (2021 - 15%). The balances recorded are net of the allowance for forgiveness. Interest rates on these
loans are 8% (2021 - 8%).
Minor capital improvement and other loans receivable comprise any loan receivable not fitting into the first two
categories. There is a variety of terms related to these loans with payment terms ranging from 1 to 5 years
(2021 - I to 5 years). The majority of these loans are secured by the asset the loan was granted to finance, but
others are unsecured. The interest rates on these loans are 0% (2021 - 0%).
Page 19 of 264
School
Region
Total
Boards
Taxation and user charges
$ 80,3317067
$ 301 ,602,371
$ 3817933,438
Share of payments in lieu of taxes
559
3,2727976
3,273,535
Share of linear properties
45,038
125,279
170,317
Amounts requisitioned
$ 80,3 64
$ 305,000,626
$ 385,377,290_
4. Trust funds
Trust funds administered by the City have not been incl in the olidated Statement of Financial
Position, nor have their operations been included in the olidat d Statern of Operations. The trust funds
under administration are comprised of cemetery p tualoFf�e and prepaid interment funds totalling
$1813131775 (2021 - $17,616,272).
5. Loans receivable
Loans receivable are made up of the following:
2022 2021
Major capital improvement loans r a
$ 5,832,783 $ 51929,891
Loans receivable with forgiv ro ns 25,396 25,396
Minor capital improveme d o oa ceivable 136,057 170,971
Illp",
$ 5,9949236 $ 67126,258_
d
Major capital improvemeEn ns are ividual loans in excess of $500,000 when issued with no forgiveness
provision built into the loan. J)W ns have repayment terms ranging from 10 to 12 years (2021 - 10 to 12
years). All major capital improro nt loans are unsecured and bear interest at rates ranging from 1.32% to
4.10% (2021 - 1.32% to 2.95%).
Forgivable loans are those initially offered with forgiveness provisions built into the agreement. All loans in this
category are unsecured and have repayment terms of 5 years (2021 - 5 years). The forgiveness provisions are
15% (2021 - 15%). The balances recorded are net of the allowance for forgiveness. Interest rates on these
loans are 8% (2021 - 8%).
Minor capital improvement and other loans receivable comprise any loan receivable not fitting into the first two
categories. There is a variety of terms related to these loans with payment terms ranging from 1 to 5 years
(2021 - I to 5 years). The majority of these loans are secured by the asset the loan was granted to finance, but
others are unsecured. The interest rates on these loans are 0% (2021 - 0%).
Page 19 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
6. Investments
Investments are made up of the following:
2022
2022
2021
2021
Cost
Market
Cost
Market
Value
Value
Guaranteed investment certificates
$ 19957955915
$ 202,0885102
$ 186,525,161
$ 1887613,269
Bonds and debentures
299177,482
2597337632
32,2421655
317993,486
Shares
407,606
5567284
281,242
564,401
$ 229,381,003
$ 228132&18
$ 219,049,058
$ 2217171,156
7. Investment in Enova Energy Corporation
Under the provincial government's Electricity Competition (Bill 35ower Corp. ("KPC"), a
holding company, along with its wholly owned subsidiar' inclu ing NiKitch -Wilmot Hydro Inc. CKWHI"),
was incorporated on July 1, 2000. ���1 Dpi
On August 1, 2000, under by-laws passed by the City and t ownship of Wilmot ("Wilmot"), the net assets of
the former Hydro -Electric Commission of Kitch ilmot transferred to the new corporation. The City
took back a 92.25% share in the common shar er er Corp. and a 92.25% share in long-term
notes payable by the affiliates for the assets tran re "'surplus property assets and cash funds were
excluded from the transfer and turned overtathe C „rr Wilmot.
Mergers of the holdinc
local distribution comp
the City, Wilmot, the C
Mergers, Amalgamatic
February 4, 2022 and
NorthHydro Holding Corporation ("WNHC"), and the
°Hydro Inc. ("WNHI") were approved by the Councils of
)f Woolwich, and the Township of Wellesley in 2021. A
no application was filed with the Ontario Energy Board on
The merger of KPC a NHC clo onSeptember 1, 2022 and the new holding company continues as
Enova Energy Corporatio corInE
amalgamated under the laws of Ontario. The City obtained a 53.39%
share of the common share nergy Corporation and the long-term notes payable were re -issued at
the same amount and rates. of the transaction, the City recorded a gain of $71288,452 on dilution
from its prior interest in KPC. Imly following, KWHI and WNHI legally amalgamated on September 1,
2022 and the new local distribution company continues as Enova Power Corp., a corporation amalgamated
under the laws of Ontario. Enova Power Corp. is 100% owned by Enova Energy Corporation.
The City's investment in Enova Energy Corporation (2021 - KPC) is comprised of the following:
2022 2021
Common shares $ 17411835807 $ 617244,208
Long-term notes receivable 7099979576 7079971576
Share of net income and prior period adjustments due to changes in
accounting policies since acquisition, net of dividends 619789,574 99,000,025
$ 306,970,957 $ 231,241,809
The Enova Energy Corporation notes are unsecured and bear interest at the rate of 3.23% (2021 - 3.23%).
There are no repayment terms and there is no intent to redeem the notes or the shares.
Page 20 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
7. Investment in Enova Energy Corporation (continued)
$ 93,352,000
The continuity of the City's investment in Enova Energy Corporation (2021 - KPC) for the year ended December
311 2022 is as follows:
73115091,000
29178241,000
2022
Balance, beginning of year
$ 231,241,809
Share of net income of Kitchener Power Corp. and its affiliates for the period
876,7331000
from January 1, 2022 to August 31, 2022
6,306,210
Dividends received from Kitchener Power Corp. from January 1, 2022 to
427578)000
August 31, 2022 67429,825
Balance, September 1, 2022
767963,000
231,118,194
Gain on dilution from prior interest in Kitchener Power Corp. and ' s
71,2889452
Share of net income of Enova Energy Corporation for the peri
, rom
647813,000
September 1, 2022 to December 31, 2022
433,429,000
4,564,311
Dividends received from Enova Energy Corporation fro
ptem
17 2022
to December 31, 2022
-
Balance, end of year
$ 306,9701957
2021
Balance, beginning of year
$ 2247960,021
Share of net income for year
10,3277388
1��J
Dividends received during ear � ��
410451,600
Balance, end of year
$ 23172411809
The following table proconden
fin*ial information with respect to Enova
Energy Corporation (2021 -
KPC) for its fiscal 2022�ir:
2022 2021
Financial position
Current assets
$ 93,352,000
$ 4612631,000
Non-current assets
73115091,000
29178241,000
Regulatory assets
51,872,000
2573961000
Total assets
876,7331000
3637483,000
Current liabilities
71,051,000
427578)000
Long-term debt
228,630,000
767963,000
Regulatory liabilities
1497179000
475431000
Other liabilities
11910311,000
647813,000
Total liabilities
433,429,000
188,8977000
Net assets
$ 4431304,000
$ 17415861,000
Page 21 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
7. Investment in Enova Energy Corporation (continued)
Page 22 of 264
For the For the
period period
January 1, September 1,
2022 to 2022 to
August 31, December 31,
2022 2022 2021
Results of operations
Revenues
$ 18396957000 $ 155,2085000 $ 2577588,000
Expenses17698
1000 146,6595000 246,3931000
Net income
6,000 8,549,000 11,195,000
City's share of net income - 53.39% 2021 - 92.25%
$*j?l0$ 4,564,311 $ 10,327,388
8. Investment in Kitchener Generation Corporation
Under the provincial governments Business Corp
n Kitchener Generation Corporation was
incorporated on December 9, 2011.
Effective January 1, 2012, the City transferred t
roof a constructed on the surface of the Kitchener
Operations Facility to Kitchener Generation Co ra
ge for 100% of its common shares and
interest bearing debt.
iii%%%exc
The investment in Kitchener Generati ation
comprised of the following:
III
2022 2021
Common shares
$ 1851,801 $ 2091027
Long-term notes receiv
1,672,213 178811239
Share of net income si ac uisition et of dividends
- -
$ 1,858,014 $ 27090,266
The notes receivable are un d and bear interest at the rate of 5.01 %. To the extent that Kitchener
Generation Corporation has posi a annual cash flows
after any dividend payment, the cash will be returned to
the City as repayment of the outstanding debt and return of capital. The proportion to which they contribute is
90% debt, 10% equity.
Page 22 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
8. Investment in Kitchener Generation Corporation (continued)
The continuity of the City's investment in Kitchener Generation Corporation is as follows:
2022 2021
Balance, beginning of year
$ 2,090,266 $
21316,914
Share of net income for year
49,318
641114
Dividends received during year
(493318)
(56,589)
Return of capital
(233226)
(23,417)
Repayment of outstanding debt
2093026
210,756
Balance, end of year
$ 1,858,014 $
2,090,266
The following table provides condensed financial information wit
Financial position
Current assets
Capital assets
Total assets
Current liabilities
Long-term debt
Total liabilities
Net assets
Results of operations P1°
Revenues $ 3869220 $ 4011175
Expenses (336,902) (337,061)
Net income 49,318 647114
City's share of net income - 100% $ 49,318 $ 641114
o Kitchener Generation Corporation:
VIII 2022 2021
11,478 $
1,858,012
1,869,490
11,476
1,672,213
1,683,689
185,801 $
2022
7,676
2,090,264
27 097, 940
7,674
1,881,239
1,888,913
209,027
2021
Page 23 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
9. Insurance pool
Accounts payable and accrued liabilities include an amount of $12,733,568 (2021 - $10,581,610) which
represents funds belonging to the Waterloo Region Municipalities Insurance Pool (the "Pool") and administered
by the City on behalf of the Pool's members. The members entered an agreement in 1998 to purchase property
damage and public liability insurance on a group basis and share a retained level of risk.
The members pay an actuarially determined annual levy to fund insurance, prefund expected losses and
contribute to a surplus. The Pool has purchased insurance to fund losses above a predetermined deductible
and any losses above a predetermined total in any year.
The City's share of Pool levies is 26.19% (2021 - 23.02%) and its share of the Pool's cumulative surplus as at
May 31, 2022 was $1,644,228 (2021 - $1,805,325). The City's share o e Pool's cumulative surplus has not
been included in the Consolidated Statement of Financial Position.
10. Deferred revenue - obligatory reserve funds 40,
Al�IDi
Obligatory deferred revenue is comprised of the following:
Development charges
Canada Community -Building Fund
Building
Recreational land
The continuity of obligatory deferre
N, Canada
Community-
lopment Building
charges Fund
2022 2021
$ 45,8335994 $ 467022,757
10, 881, 638 127 773, 507
13, 703, 780 147 657, 882
1253319116 97660,257
$ 829750,528 $ 83,114,403
Recreational
Building land Total
Balance, January 1, 2022 461022,757
$ 12,773,507
$ 14,657,882
$ 956609257
$ 8351145403
Collections 2750033435
753965672
117615269
21896,115
395057,491
Interest earned 408,670
775324
2949048
189,588
969,630
Deferred revenue recognized (275600,868)
(95365,865)
(3,0091419)
(414,844)
(409390,996)
Balance, December 31, 2022 45,833,994
10,881,638
13,7039780
12,331,116
82,7501528
Balance, January 1, 2021
3570297877
673027509
1378187330
575267943
6076777659
Collections
3278297023
1475077301
7047789
471281995
5271707108
nterest earned
-
897115
1447637
875161
3207913
Deferred revenue recognized
(2178367143)
(871257418)
(97874)
(82,842)
(3070541277)
Balance, December 31, 2021
$ 4670227757
$ 1277737507
$ 14,6577882 $
91660,257
$ 8371141403
Page 24 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
11. Municipal debt
The City has assumed responsibility for the payment of principal and interest charges on certain long-term debt
issued by other municipalities. At the end of the year, the outstanding principal amount of this liability is
$57,7247950 (2021 - $593,9623,275).
The annual principal repayments are:
2023
$ 9,483,327
2024
8,6629268
2025
930699372
2026
838305468
2027
53815,174
2028 and thereafter
1538643341
$ 57,724,950
The annual principal and interest payments required to be municipal debt are within the annual debt
repayment limit prescribed by the Ontario Ministry,,,,,of Municip fairs and Housing.
The latest available repo the O S plan was as at December 31, 2022. At that time the plan reported a
$6.7 billion actuarial deficit, df�'
ctuarial liabilities of $130.3 billion and actuarial assets of $123.6 billion.
Ongoing adequacy of the curre tribution rates will need to be monitored and may lead to increased future
funding requirements. As at December 31, 2022, the City has no obligation under the past service provisions of
the OMERS agreement.
13. Employee future benefits
The estimated liability for employee future benefits is comprised of the following:
2022 2021
Sick leave benefit plan $ 2190489254 $ 207869,210
Post-retirement benefits 245344,236 237658,385
Future payments to WSIB 9,257,800 917077500
$ 54,650,290 $ 541235,095
Page 25 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
13. Employee future benefits (continued)
$ 3,4739703
Significant actuarial assumptions
916,480
2025
Workplace Safety Insurance Sick Leave & Post -
2026
Board Retirement Benefits
2027
2022 2021 2022 2021
Discount rate
5.00 2•75 5.00 2.75
Salary growth assumptions
N/A N/A 3.00 3.00
CPI increase assumptions
2.50 2.00 2.50 2.50
Health care initial trend rate
N/A N/A 5.90 5.90
Health care ultimate trend rate
N/ N/A 4.50 4.50
Dental care initial trend rate
Wq /A 4.00 4.00
Dental care ultimate trend rate
N/A 4.00 4.00
a. Sick leave benefit plan
Under the sick leave benefit plan, unused sic
ve can inulate and certain employees may become
entitled to cash payments when they leave the
me he amount of benefits paid during the year
were $1,953,862 (2021 - $2,550,997).
A reserve fund to provide for this liabili uded
ccumulated surplus, in the amount of $6,473,313 (2021
- $63,332,903).
Anticipated undiscounted paymen em
re eligible to retire are:
2023
$ 3,4739703
2024 r
916,480
2025
990,076
2026
830,231
2027
788,047
2028 and thereafter
51129,171
$ 1291279708
The actuarial valuation of the future liability for sick leave assumes a discount rate of 5.00% (2021 -
2. 75%). The last actuarial valuation for this liability was completed at December 31, 2020.
Page 26 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
13. Employee future benefits (continued)
a. Sick leave benefit plan (continued)
The actuarial expense for the current year was $2,132,906 (2021 - $2,158,899) and is comprised of the
following items:
2022 2021
Current period benefit cost $ 112863234 $ 17324,175
Amortization of actuarial losses 2765463 339,204
Sick leave benefit expense 40111110 1,562,697 17663,379
Sick leave benefit interest expense 5709209 4952520
Total expenses related to sick leave benefits $ 2,132,906 $ 2,158,899
As at December 31, 2022, the unamortized actuarial gains (I s) were 11247 (2021 - $443,601) and are
amortized over 11 to 13 years (2021 - 11 to 13 years).
b. Post-retirement benefits
The City pays certain health, dental and life ins enefits ehalf of its retired employees up to the age
of 65 if they have at least ten years of service wi h he ount of benefits paid during the year were
$171851801 (2021 - $1, 257, 388).
The City holds no reserve to meet thi
The actuarial valuation of the fu
(2021 - 2.75%) and inflation rates
actuarial valuation for this liabiti�tw»»»»>was
The actuarial expense
ostlbtirement benefits assumes a discount rate of 5.00%
ms of 4.0% to 5.9% (2021 - 4.0% to 5.9%. The last
leted at December 31, 2020.
652 (2021 - $2,252,930) and is comprised of the following items:
Current period benefit cost' Nr' $ 191269425 $ 17199,344
Amortization of actuarial losses 113,028 516,731
Post-retirement benefit expense 11239,453 1,7167075
Post-retirement benefit interest expense 6321199 5361855
Total expenses related to post-retirement benefits $ 11871,652 $ 27252,930
As at December 31, 2022, the unamortized actuarial gains (losses) were $6,059,480 (2021 - $1,202,863) and
are amortized over 11 to 13 years (2021 - 11 to 13 years).
Page 27 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
13. Employee future benefits (continued)
c. WSIB
The Workplace Safety and Insurance Board (WSIB) administers injured worker benefits payments on behalf of
the City as a Schedule 2 employer. The amount of benefits paid during the year were $2,465,700 (2021 -
$2,366, 600).
A reserve fund to provide for this liability is included in accumulated surplus, in the amount of $5,248,311 (2021
- $4, 789, 4 70) .
The actuarial valuation of the future liability for WSIB assumes a discount rate of 5.00% (2021 - 2.75%). The
last actuarial valuation for this liability was completed at December 31, 2„2.
The actuarial expense for the current year was $2,016,000 (202 $1,736,500) and is comprised of the
following items:
Current period benefit cost
Amortization of actuarial losses
WSIB benefit expense
WSIB benefit interest expense
Total exDenses related to WSIB benefits
2022
2021
$ 996,400 $
9121400
702,300
5731800
1,698,700
174861200
317,300
250,300
$ 290169000 $
1,736,500
As at December 31, 2022, the una "r""'J' ctua losses were $2,296,900 (2021 - $2.,066,000) and are
amortized over 12 years (2021 - 12 rs).
The write-down of tangible capital assets during the year was $nil (2021 - $nil).
The amount of interest capitalized was $nil (2021 - $nil).
Page 28 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
15. Accumulated surplus
The accumulated surplus consists of individual fund surpluses/(deficits) and reserve funds as follows:
2022 2021
Surplus:
Invested in tangible capital assets $1,467,695,615 $1738976347219
Other 341773,543 1878151880
Investment in Enova Energy Corporation 306,970,957 2317241,809
Investment in Kitchener Generation Corporation 11858,014 27090,266
Employee future benefits unfunded 5496509290 5452351095
Total surplus 1.756.647.839 1.587.547.079
Reserve funds set aside for specific purposes by Cou"'il"for:
Capital
Stabilization 0 0
Program specific
Corporate
Reserve funds set aside for specifi
entities:
Kitchener Public Library
Kitchener Downtown Improvement A
The Centre in the Square
es b ,,'onsoIidated
61, 688, 848
38, 734, 604
11,890,075
14,366,049
126.679.576
1111111W��"�� 584,339
and of Management 50,000
j,,,,,,,,, 11869,415
53, 324, 641
37,986,430
10, 059, 829
13, 631, 628
115.002.528
735,262
501000
178637809
'A
215035754 27649,071
Total reserve funds Ir 129,1839330 1177651,599
Accumulated surplus
16. Contingent liabilities
$1,885,8319169 $11705,198,678
Legal actions have been undertaken against the City relating to a number of contract disputes and other
matters. The outcome of these actions is not presently determinable. It is management's opinion that the City's
insurance will adequately cover any potential liability arising from these contract disputes and other
matters. Should any liability be determined and not covered by insurance it will be recognized in the period
when it is determined.
Page 29 of 264
THE CORPORATION OF THE CITY OF KITCHENER
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2022
17. Segmented information
The City of Kitchener is a diversified municipal government institution that provides a wide range of services to
its citizens, including fire, roads, water, sewer, storm sewer, gasworks, libraries, and community services.
Segmented information has been presented in Schedule B by major functional classification of activities
provided, consistent with the Consolidated Statement of Operations and provincially legislated requirements.
For each reported segment, revenues and expenses represent both amounts that are directly attributable to the
segment and amounts that are allocated on a reasonable basis.
The accounting policies used in these segments are consistent with those followed in the preparation of the
consolidated financial statements as disclosed in Note 1.
18. Budget figures
The budget figures reflected in these consolidated financial aft menNre'
ose approved by Council at a
meeting on December 13, 2021. Budget figures have been slated to PublicSector Accounting Board
standards.
��������IIIII Illllllllllllllllllllllllllu�
19. Comparative figures III
Certain of the prior year's comparative figur been lassified to conform to the current year's
presentation. 11 Ilu�
20. Subsequent events
Financial statements are require
statements and the date of the a
existed as at year end. " "
be sted events occurring between the date of the financial
rs' provide additional evidence relating to conditions that
° eted this assessment and did not identify any such adjustment.
Page 30 of 264
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1,9 1 91, M',a
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener, ON N2G OE1
Canada
Te 1519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the Mayor and Members of Council, Inhabitants an, of The Corporation of
the City of Kitchener
Opinion
We have audited the financial stateme of T j, rust Funds of the Corporation of the
City of Kitchener (the Entity), which comps
• the balance sheet as at Decmw
15 202
• the statement of continuity for ye ded
• and notes to the f ( tate ts, including a summary of significant
accounting poli
(Hereinafter referre as tatements").
In our o cc anying financial statements present fairly, in all material
respec e balanc eet the Entity as at December 31, 2022, and the statement of
continuit the year en ended in accordance with Canadian public sector accounting
standards.
Basis for Opir'ion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
Auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
.III c , .gu m �. u � n III�� �uiV. IIIui II,., wWuV:' u a , w cull �� a ut a 114 a Illus r� � � u�: Ill 11 �..,,ry k b fl � u inr� bi )ni �� ii . ep vi . erit
uxlliernser lumm� �llIlu����� ��dm,.
i 11�RNAG urutierradona� Ill,1� V�d^1���11��le irnuli� l 'i�1��� gmuaurrle
III �B�n:��,ehA1 iD n dc''a sp�
Page 35 of 264
1,9 1 91, M',a
Page 2
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 public sector accounting standards and for such
internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, managem is responsible for assessing the
Entity's ability to continue as a going concern,
� �di �s� s applicable, matters related to
going concern and using the going concern b acco gunless management either
intends to liquidate the Entity or to cease `rations, or ha realistic alternative but to
do so.
G%
Those charged with governance are res ,� le for overseeing the Entity's financial
reporting n
p g p rocess.
Auditor's Responsibilities
of the Financial Statements
Our objectives are t "tain r sona l assurance about whether the financial statements
as a whole are fir r���JJJJ rom r l;;tr�rr statement, whether due to fraud or error, and to
issue an Auditor's rep "t includes our opinion.
Reason T assura is ugh level of assurance, but is not a guarantee that an audit
conduc accorda with Canadian generally accepted auditing standards will always
detect a m I mis ement when it exists.
kk
FF
Misstatements c 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional 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.
Page 36 of 264
1,9 1 91, M',a
Page 3
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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures mad management.
• Conclude on the appropriateness of manage se of the going concern basis of
accounting and, based on the audit eviden tai n whether a material uncertainty
exists related to events or conditions t FlRmay casts ' icant doubt on the Entity's
ability to continue as a going con If w (conclude' at a material uncertainty
exists, we are required to draw ti our Auditor's report to the related
disclosures in the financial statement if such disclosures are inadequate, to
modify our opinion. Our con are b on the audit evidence obtained up to
the date of our Auditor's rep Ho ut e events or conditions may cause the
Entity to cease to co e as a conc n.
• Evaluate the ov ff pre tatio tructure and content of the financial statements,
including the clos ether the financial statements represent the
underlying trans a and eve s in a manner that achieves fair presentation.
• Com cate th charged with governance regarding, among other matters,
j jjj
th nned scop nd t ","Charged
of the audit and significant audit findings, including any
signi `t deficien 11 sin internal control that we identify during our audit.
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
DRAFT
Page 37 of 264
THE CORPORATION OF THE CITY OF KITCHENER TRUST
FUNDS
Balance Sheet
As at December 31, 2022
2022 2021
Assets
Accounts receivable
$ 36,485
$ 47,141
Interest receivable
131,586
1401846
Loans receivable (Note 2)
419,968
4731180
Investments (Note 3)
Short-term
2,8659512
175281320
Long-term
14,860,224
157426,785
............. .. /////////,///)/),�,r°° 18,313,775
17,616,272-------------
Fund Balance
The accompanying notes are an integral part of these financial s ents.
pill�
$189313,775 $17,616,272
Page 38 of 264
THE CORPORATION OF THE CITY OF KITCHENER TRUST
FUNDS
Statement of Continuity
For the Year Ended December 31, 2022
The accompanying notes are an integral part of these financia1RWg1 # ' "nts.
Page 39 of 264
2022
2021
Receipts
Perpetual care funds
$ 4611298 $
559,284
Interest earned
428,059
4211771
Other
721115
1111157
9611472
170921212
Expenditures
Transfer to cemeteries op erations
263,969
262,380
263,969
262,380
Net chan a in fund
6979503
829,832
Balance'beginning of year//////
17,616 272
16,786,440
Balance end of year
$G////% 18,313,775
17,616,272
ax
The accompanying notes are an integral part of these financia1RWg1 # ' "nts.
Page 39 of 264
THE CORPORATION OF THE CITY OF KITCHENER TRUST
FUNDS
Notes to the Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies
2.
3.
These financial statements of the Corporation of the City of Kitchener Trust Funds have been prepared in
accordance with Canadian generally accepted accounting principles for public sector entities as established by
the Public Sector Accounting Board of the Chartered Professional Accountants of Canada. The following is a
summary of the significant accounting policies followed in the preparation of these financial statements:
a. Basis of accounting
Sources of financing and expenditures are reported on the accrual basis of accounting. The accrual basis of
accounting recognizes receipts as they become available and meas ' ble; expenditures are recognized as
they are incurred and measurable as a result of receipt of good services and the creation of a legal
obligation to pay.
Loans receivable
During2019 under authorization of the Bereavement A rit of ntario th�° oodland Cemetery Perpetual
rY p
Y �N
Care Trust issued a loan to the Corporation of the City /1the ��°n the amount of $575,000. The loan bears
interest at 3% and will be repaid over ten years beginning i� ary 2020.
Investments
The long-term investm
market value of $14,4:
4. Statement of cash flo
A separate statement
activities are readily ap
ported on the Balance Sheet at cost, have a
)ws from operating, investing, and financing
Page 40 of 264
0
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to
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KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the Members of the Belmont Improvement and of Management
Opinion
We have audited the financial S-1 T Belmont Improvement Area
Management (the Entity), which compris
• the statement of financial",""',sat ber 31, 2022
211
• the statement of revenue a .
year then ende
• the statem f cha es in n
• and notes to 14
ac c �� ���lll ici
(Her fter refer
°ancial s
n' nd accumulated surplus for the
nancial assets for the year then ended
ments, including a summary of significant
to 60he "financial statements").
Board of
In our on, accompanying financial statements present fairly, in all material
respects, t� � ' cial position of the Entity as at December 31 2022 and its results of
p 1�p Y ,
operations, an its changes in net financial assets for the year then ended in accordance
with Canadian public sector accounting standards relevant to preparing such a financial
statement.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
Auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
KRN� G III U�"11 ain ontaido, ,3W,.ANmb :: uid mmm�� ��u n[oe Il::uu m ii.A Vl u,�:, II����� Im�� I ll�u������:�� orlii w:� iniiz ���d'on �� :: uindli� , �,�����w m��°ent
urs iii.: r er Iluuurns .,:fi k,: ' ., lu m umll..muwn.mll.a mm ..m ....mrmtmull. �., r Il. um .
�u U ern ain Illuur mmll. IIS
II11AG Canada Ilru au"m � r° m t h IIIA R\A III....
Page 42 of 264
1,9 1 91, M',a
Page 2
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
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 public sector accounting standards and for such
internal control as management determines is necess to enable the preparation of
financial statements that are free from material mi ement, whether due to fraud or
error.
In preparing the financial statements, ma cement is onsible for assessing the
Entity's ability to continue as a going con ,disclosing as licable, matters related to
going concern and using the going conc basi � accounting unless management either
intends to liquidate the Entity or to cease ons, or has no realistic alternative but to
do so.
Those charged with governanc re ib for overseeing the Entity's financial
reporting process.
Auditor's Resp
Our objectives e
as a whol
issue a ditor's r
Reasonabl ursa
conducted in a
detect a material
e Audit of the Financial Statements
le assurance about whether the financial statements
aterial misstatement, whether due to fraud or error, and to
cludes our opinion.
n pis a high level of assurance, but is not a guarantee that an audit
'ice with Canadian generally accepted auditing standards will always
isstatement 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional 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.
Page 43 of 264
1,9 1 91, M',a
Page 3
• 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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
f,
accounting estimates and related disclosures mad Mfr° management.
• Conclude on the appropriateness of manage % se of the going concern basis of
accounting and based on the audit eviden a Main J hether a material uncertainty
exists related to events or conditions may cast s cant doubt on the Entity's
Y � 1�ii� Y
abilityto continue as a going con If w conclude hat a material uncertainty
exists, we are required to draw a ,/ tiff n our Auditor's report to the related
disclosures in the financial statements if such disclosures are inadequate, to
���f
l�
modify our opinion. Our con �gre b on the audit evidence obtained up to
the date of our Auditor's re o� Ho ;°' t e events or conditions may cause the
Entity to cease to co,rJ e as a, concern.
• Evaluate the ov I pre tatio tructure and content of the financial statements,
including the clos `ether the financial statements represent the
underlying transa and even s in a manner that achieves fair presentation.
• Com ��l "'irate°°°"''11, th°641 charged with governance regarding, among other matters,
th nned scop nd tiro of the audit and significant audit findings, including an
J� p� g 9 g g Y
signi l�yl deficient s in internal control that we identify during our audit.
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
DRAFT
Page 44 of 264
BELMONT IMPROVEMENT AREA BOARD OF
MANAGEMENT
Statement of Financial Position
As at December 31, 2022
The accompanying notes are an integralj# tt of tl�fffia fins"al statements.
Page 45 of 264
2022
2021
Financial assets
Cash
$
18,491 $
19,992
Accounts receivable
-
61025
18,491
261017
Financial liabilities
Accounts payable and accrued liabilities
12,254
71000
Net financial assets liabilities
69237
19,017
Non-financial assets
Tangible capital assets (Note 2)
51,030
43,057
Prepaid expenses
11195
11056
52,225
441113
Net assets
AM,
58,462
631130
Accumulated Surplus
Accumulated net revenue (deficit)
7,432
201073
Invested in tangible capital assets
51,030
43,057
Total accumulated surplus
$
58,462 $
63,130
The accompanying notes are an integralj# tt of tl�fffia fins"al statements.
Page 45 of 264
BELMONT IMPROVEMENT AREA BOARD OF
MANAGEMENT
Statement of Revenue and Expenses and Accumulated Surplus
For the Year Ended December 31, 2022
The accompanying notes are an integre%Fart oft e fins I statements.
Page 46 of 264
2022
2021
Revenue
Assessments
$
41,890 $
40,670
Grants
-
181000
Other revenue
48,938
51840
90,828
641510
Expenses
Streetscaping
39,552
15,277
Audit
19808
1,808
Insurance
31117
21129
Winter maintenance
271758
16,127
Advertising
Miscellaneous
91599
127485
81280
51028
Amortization
51382
41434
95,496
571288
Net surplus (deficit) for year
(49668)
7,222
Accumulated surplus, beginning of year
639130
55,908
Accumulated surplus, end of year
$
58,462 $
63,130
The accompanying notes are an integre%Fart oft e fins I statements.
Page 46 of 264
BELMONT IMPROVEMENT AREA BOARD OF
MANAGEMENT
Statement of Change in Net Financial Assets
For the Year Ended December 31, 2022
2022 2021
Net surplus (deficit) for year
$ (41668) $
71222
Acquisition of tangible capital assets
(13,355)
(903)
Amortization of tangible capital assets
5,382
41434
Acquisition of prepaid expenses
(139)
(138)
Change in net financial assets
(12,780)
101615
Net financial assets, beginning of year
19,017
81402
Net financial assets (liabilities). end of vear
$ 6.237 $
19.017
The accompanying notes are an integral part of these financial stateme
Page 47 of 264
BELMONT IMPROVEMENT AREA BOARD OF
MANAGEMENT
Notes to Financial Statements
For the Year Ended December 31, 2022
1. Summary of significant accounting policies
The financial statements of the Belmont Improvement Area Board of Management (the "Board") have been
prepared by management in accordance with Canadian generally accepted accounting principles for local
governments as established by the Public Sector Accounting Board of the Chartered Professional Accountants
of Canada. The following is a summary of the significant accounting policies followed in the preparation of
these financial statements:
a) Accrual basis of accounting
The financial statements are prepared using the accrual basis f accounting. The accrual basis of
accounting recognizes revenues in the period in which the tran ons or events occurred that gave rise
to the revenues. Expenses are recognized in the period t ods and services are acquired and a
liability is incurred.
b) Tangible capital assets
Tangible capital assets are recorded at cost whi ll
clud II amoun that are directly attributable to
acquisition, construction, development or betterm of IM, asset. The cost less residual value of the
tangible capital assets is amortized on a straight-line over their estimated useful lives as follows:
Assets iz117bn Period
Machinery &equipment to 1 years
Computer hardware / 2 years
Tangible capital assets rece f/ as�a II l181 P11 l�re recorded at their fair value at time of receipt and are
recorded as revenue.
c) Use of estimates
The preparation"; ` he financial' tatements requires management to make estimates and assumptions
that affect the repo / amount f assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the fin t J I st ents and the reported amounts of revenues and expenses during the
year. These estimates ssum tions including the valuation of tangible capital assets and their
Y �� p� g g p
related useful lives and a ortization are based on management's best information and judgment and
may differ significantly from future actual results.
Page 48 of 264
BELMONT IMPROVEMENT AREA BOARD OF
MANAGEMENT
Notes to Financial Statements
For the Year Ended December 31, 2022
2. Tangible capital assets
Cost
Balance, beginning of year
Additions
Balance, end of year
Accumulated amortization
Balance, beginning of year
Disposals
Amortization expense
Balance, end of year
Net book value, end of year
Net book value. beainnina of vear
Machinery & Computer
Equipment Hardware Total
60,426 $
13 355
,i ,,,.
15356 $ 611782
13,355
3. Related party transactions
During the year the Board IJra I support fees of $25,000 (2021 - $5,650) to the Corporation of the
City of Kitchener, its utli con g .These are included in streetscaping expenses on the Statement
of Revenue and Expen and Accu ate urplus.
4. Statement of cash flow
PIP
A separate statement of cash is not presented, since cash flows from operating, investing and financing
activities are readily apparent from the other financial statements.
Page 49 of 264
IIIIIIII,,3,781
19356
75,137
(179
(1,017)
(18,725)
(59043)
(339)
(59382)
(22,751)
(13356)
(243107)
51,030
-
51 ,030
$ 423718 $
339 $
433057
3. Related party transactions
During the year the Board IJra I support fees of $25,000 (2021 - $5,650) to the Corporation of the
City of Kitchener, its utli con g .These are included in streetscaping expenses on the Statement
of Revenue and Expen and Accu ate urplus.
4. Statement of cash flow
PIP
A separate statement of cash is not presented, since cash flows from operating, investing and financing
activities are readily apparent from the other financial statements.
Page 49 of 264
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
Opinion
We have audited the financial statements of Kitchener Downtown Improvement Area
Board of Management (the "Entity"), which comprise:
• the statement of financial position as at December 31, 2022
• the statement of revenue and expenses 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 material
respects, the financial position of the Entity as at December 31, 2022, and its results
of operations, its changes in net financial assets and its cash flows for the year then
ended in accordance with Canadian public sector accounting standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of
our auditor's report.
We are independent of the Entity in accordance with the ethical requirements that
are relevant to our audit of the financial statements in Canada and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
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u ur uIIu belt, Cuuuuis uPN"���i� .�uutl.�,u�u11a� o 11 fl uuri)II/ rlI Efu1c,g11du 1up u11Iv 11a 11�c(I1fby uuan'tIII I' 11c.
p F NI G Cau o acLiIp u'ci Ii d ca p ;� P IIVI IG I I P.
Page 50 of 264
Page 2
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 public sector accounting standards and for such
internal control as management determines is necessary to enable the preparation 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 Entity'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 either intends
to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity'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 material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional 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.
Page 51 of 264
Page 3
• 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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• 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 Entity'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 Entity 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.
Z4P
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
May 24, 2023
Page 52 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Statement of Financial Position
Year ended December 31, 2022, with comparative information for 2021
2022 2021
Financial Assets
Cash $ 6427649 $ 3467072
Term deposits (note 2) 1167537 1157670
Accounts receivable 777853 4067075
Prepaid expenses 177249 87120
8547288 8757937
Financial Liabilities
Accounts payable and accrued charges
4377303
4287758
Due to the City of Kitchener (note 4)
217606
297972
4587909
4587730
Net financial assets
3957379
4177207
Non -Financial Assets
Tangible capital assets (note 5)
7247560
6107999
Net assets
$ 171197939
$ 170287206
Accumulated Surplus
Reserve for rate stabilization
$ 507000
$ 507000
Accumulated net revenue
3457379
3677207
Invested in tangible capital assets
7247560
6107999
Total accumulated surplus
$ 171197939
$ 170287206
See accompanying notes to financial statements.
On behalf of the Board:
Director
Director
Page 53 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Statement of Revenue and Expenses and Accumulated Surplus
Year ended December 31, 2022, with comparative information for 2021
Budget Actual Actual
2022 2022 2021
(note 7)
Revenue:
Assessments $ 173797000 $ 173797000 $ 173797000
Interest — 867 749
Other income (note 6) 957000 817669 3727885
174747000 174617536 177527634
Expenses:
Promotions and advertising
7597000
6397669
3807610
Salaries, wages and benefits
417,500
4287782
3987447
Administration
106,500
1111435
901670
Meetings and seminars
41000
41428
183
Safety and beautification
977000
867453
827276
Member relations
109000
89339
71388
Amortization
—
69,091
44,904
173947000
173487197
170047478
Net revenue before other items
807000
1137339
7487156
Net assessment write-offs (note 4)
457000
217606
297972
Annual surplus
357000
917733
7187184
Accumulated surplus, beginning of year
170287206
170287206
3107022
Accumulated surplus, end of year
$ 170637206
$ 171197939
$ 170287206
See accompanying notes to financial statements.
Page 54 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Statement of Changes in Net Financial Assets
Year ended December 31, 2022, with comparative information for 2021
See accompanying notes to financial statements.
Page 55 of 264
2022
2021
Annual surplus
$ 917733
$ 7187184
Acquisition of tangible capital assets
(1827652)
(6347453)
Amortization of tangible capital assets
697091
447904
Change in net financial assets
(217828)
1287635
Net financial assets, beginning of year
4177207
2887572
Net financial assets, end of year
$ 3957379
$ 4177207
See accompanying notes to financial statements.
Page 55 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Statement of Cash Flows
Year ended December 31, 2022, with comparative information for 2021
2022 2021
Cash provided by (used in):
Operating activities:
Annual surplus
$ 917733
$ 7187184
Item not involving cash:
Amortization
697091
447904
Changes in non-cash assets and liabilities:
Accounts receivable
3287222
(3737684)
Prepaid expenses
(97129)
17701
Accounts payable and accrued liabilities
87545
2387733
Due to the City of Kitchener
(89366)
(789025)
Cash from operating activities
4807096
5517813
Investing activities:
Acquisition of tangible capital assets
(1827652)
(6347453)
Purchase of investments
(867)
(749)
Cash used in investing activities
(1837519)
(6357202)
Increase (decrease) in cash 2967577 (837389)
Cash, beginning of year 3467072 4297461
Cash, end of year $ 6427649 $ 3467072
See accompanying notes to financial statements.
Page 56 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Notes to Financial Statements
Year ended December 31, 2022
1. Summary of significant accounting policies:
Kitchener Downtown Improvement Area Board of Management (the "Board") is established for
the main purpose of revitalizing the Central Business District of the City of Kitchener. It is
designated as a Business Improvement Area (BIA) through the Ontario Municipal Act and a City
of Kitchener by-law enacted in 1977.
The financial statements of the Board are the representation of management and have been
prepared in accordance with Canadian generally accepted accounting principles for local
governments, as recommended by the Public Sector Accounting Board (PSAB) of the Chartered
Professional Accountants of Canada. Since precise determination of many assets and liabilities
is dependent upon future events, the preparation of periodic financial statements necessarily
involves the use of estimates and approximations. These have been made using careful
judgment.
(a) Tangible capital assets:
Tangible capital assets are recorded at cost which includes amounts that are directly
attributable to acquisition, construction, development or betterment of the asset. The cost,
less residual value, of the tangible capital assets, excluding land and landfill sites, are
amortized on a straight-line basis over their estimated useful lives as follows:
Asset
Useful Life - Years
Computers
4 years
Furniture and fixtures
7 years
Leasehold improvements
7 years
Event equipment
10 years
Patio equipment
5 - 12 years
Structures
5 years
Annual amortization is charged in the year of acquisition and in the year of disposal. 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 and also are recorded as revenue.
(b) Accrual basis of accounting:
The accrual basis of accounting recognizes revenues as they become available and
measurable; expenditures are recognized as they are incurred and measurable as a result of
receipt of goods or services and the creation of a legal obligation to pay.
Page 57 of 264
KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Notes to Financial Statements, continued
Year ended December 31, 2022
1. Summary of significant accounting policies (continued):
(c) Revenue recognition:
Revenues are recognized as follows:
The Board Assessment revenue is recorded on an annual basis using the proportionate
share of the total number of businesses for the year and an annually established rate per
business. Revenue is recognized when assessed.
Other revenues are recorded upon sale of goods or provision of service when collection is
reasonably assured.
2. Term deposits:
The term deposits consist of the following:
Principal Maturity Rate
$ 11,062 April 17, 2023 3.25%
52,295 March 20, 2023 1.20%
53,180 March 17, 2023 4.00%
3. Commitments:
The Board executed a new lease agreement effective January 1, 2023. The lease expires on
December 31, 2027. The Board is committed to the following minimum payments under the
agreement:
2023 $ 48,395
2024 547990
2025 587304
2026 64, 325
2027 69,327
4. City of Kitchener:
The Board receives assessment income from the City of Kitchener for its operations. During the
year, assessment write-offs were incurred for $ 21,606 (2021 - $29,972).
Page 58 of 264
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KITCHENER DOWNTOWN IMPROVEMENT AREA
BOARD OF MANAGEMENT
Notes to Financial Statements, continued
Year ended December 31, 2022
6. Government grants:
Included in other income is a transfer of $ 20,219 received from City of Kitchener.
7. Budget figures:
The budget figures shown in the financial statements were approved by the Board of Kitchener
Downtown Improvement Area Board of Management at a meeting on September 28, 2021.
1,:RVIG Ll P, aul Oum'urlici Hinked Habd�tl.y and mc,tnber Cirri w'fliio �:P'VlGgVcdxd � 'TVIIN 11 111,11111,
I ininked a 1"willi"fliC, 1-,Ugh�dll I'MrIllpan"I'll/ hImIlwd by
11i (-`aunda pron/Wcs ser vwc,,; wi G,CFVIG I I P.
Page 60 of 264
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the members of Kitchener Public Library
Opinion
We have audited the financial statements of Kitchener Public Library (the Entity), which
comprise:
• the statement of financial position as at December 31, 2022
• the statement of operations and changes in 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 material
respects, the financial position of the Entity as at December 31, 2022, and its results of
operations and changes in accumulated surplus, its changes in net financial assets and its
cash flows for the year then ended in accordance with Canadian public sector accounting
standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
','11 ., (i i •, r i ����m, p ^" .. IIP �" r i, roe r r �n I rig '� 'dig .� ., I.,: ���Wi. K ` I N, 'r�. �, ..; ° ,
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Page 61 of 264
Page 2
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 public sector accounting standards and for such
internal control as management determines is necessary to enable the preparation 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
Entity'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 either
intends to liquidate the Entity or to cease operations, or has no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing the Entity'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 material misstatement, whether due to fraud or error, and to
issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional 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.
Page 62 of 264
Page 3
• 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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• 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 Entity'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
Entity 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, Licensed Public Accountants
Kitchener, Canada
March 15, 2023
Page 63 of 264
KITCHENER PUBLIC LIBRARY
Statement of Financial Position
December 31, 2022, with comparative information for 2021
Financial assets
2022 2021
Cash
$ 27 021, 464
$ 119567322
Accounts receivable
1617972
1533690
Due from City of Kitchener
83,078
1957142
Investments (note 2)
507000
503000
Endowment investments (note 2)
1007000
100,000
Total financial assets
2,4167514
274551154
Financial liabilities
Accounts payable and accrued liabilities
5697728
6697058
Due to Early Literacy Alliance of Waterloo Region
6487637
566,950
Deferred revenue (note 4)
5137810
4023384
117327175
176389392
Net financial assets
6847339
8167762
Non-financial assets
Tangible capital assets (note 3)
5,0957735
572937309
Prepaid expenses
-
187500
530957735
573117809
Accumulated surplus (note 8)
$ 57807074
$ 67128,571
See accompanying notes to financial statements.
On behalf of the Board:
Director
Director
Page 64 of 264
KITCHENER PUBLIC LIBRARY
Statement of Operations and Changes in Accumulated Surplus
Year ended December 31, 2022, with comparative information for 2021
See accompanying notes to financial statements.
Page 65 of 264
Budget
Actual
Acutal
2022
2022
2021
Revenues:
Grants:
The City of Kitchener - Operating
$ 11,558,934
$ 11,558,934
$ 11,410,596
The City of Kitchener- Capital and
special (note 5)
-
450,352
6841727
The City of Kitchener - special (note 6)
-
707069
211571
Province of Ontario
306,980
306,980
306,980
Interest and miscellaneous
40,000
80,600
171163
Rentals
105,000
79,565
18,122
Partnerships
55,000
56,568
53,079
Photocopy
437000
40,667
14,745
Lost and damaged fees
30,000
21,926
13,871
Total revenue
127138,914
127665,661
127301854
Expenses:
Personnel costs (schedule 1)
94731197
91140,995
878027392
Resource materials
17207,900
17440,563
1,453,870
Equipment (schedule 2)
366,500
953,851
901,830
Facilities costs (schedule 3)
788,917
837,328
859,892
Administrative (schedule 4)
225,900
268519
248,878
Expenditures related to capital and special (note 5)
-
181,390
2887674
Required expenditures related to special
grants (note 6)
-
70,069
2117571
Programs and publicity (schedule 5)
76,500
68,496
72,196
Processing/bindery
90,000
44,342
79,240
General library equipment
10,000
89605
12,026
Total expenses
127238,914
137014,158
12,9307569
Deficiency of revenue over expenses
(100,000)
(348,497)
(199,715)
Accumulated surplus, beginning of year
63128,571
6,328,286
Accumulated surplus, end of year
$ 51780,074
$ 6,128,571
See accompanying notes to financial statements.
Page 65 of 264
KITCHENER PUBLIC LIBRARY
Statement of Change in Net Financial Assets
Year ended December 31, 2022, with comparative information for 2021
See accompanying notes to financial statements.
Page 66 of 264
2022
2021
Deficiency of revenue over expenses
$ (348,497)
$ (199715)
Acquisition of tangible capital assets
(1,202,805)
(13388,350)
Amortization of tangible capital assets
174003379
11380,717
(150) 923)
(207, 348)
Change in prepaid expenses
18,500
(97545)
Change in net financial assets
(132,423)
(216,893)
Net financial assets, beginning of year
816,762
13033,655
Net financial assets, end of year
$ 6843339
$ 816762
See accompanying notes to financial statements.
Page 66 of 264
KITCHENER PUBLIC LIBRARY
Statement of Cash Flows
Year ended December 31, 2022, with comparative information for 2021
Operating activities:
Deficiency of revenue over expenses
Item not involving cash:
Amortization of tangible capital assets
Changes in non-cash operating working capital
Accounts receivable
Prepaid expenses
Due from City of Kitchener
Accounts payable and accrued liabilities
Due to Early Literacy Alliance of Waterloo Region
Deferred revenue
Cash provided by operating activities
Capital activities:
Cash used to acquire tangible capital assets
Increase in cash
Cash, beginning of year
2022 2021
$ (348,497) $ (199,715)
1,400, 379 11380,717
(87282)
1707363
187500
(97545)
1123064
(577218)
(997330)
(89,693)
817687
2667950
1113426
(137279)
1,267,947
(112027805)
1,448,580
(173887350)
65,142 60,230
11956,322 11896,092
Cash, end of year $ 2,0213464 $ 11956,322
See accompanying notes to financial statements.
Page 67 of 264
KITCHENER PUBLIC LIBRARY
Notes to Financial Statements
Year ended December 31, 2022
Kitchener Public Library (the "Board") was incorporated as a not-for-profit organization, without share
capital, under the laws of Ontario. It is a Board of the City of Kitchener (the "City") and is dependent
on the City for a significant portion of its operating and capital funding.
The Board contributes to the community as a resource and a gateway with sources of information and
works of imagination.
1. Significant accounting policies:
The financial statements of the Board are the representation of management and have been
prepared in accordance with Canadian generally accepted accounting principles for local
governments, as recommended by the Public Sector Accounting Board of the Chartered
Professional Accountants of Canada. The following is a summary of the significant accounting
policies followed in the preparation of these financial statements.
(a) Basis of accounting:
The Board 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 or services
and/or the creation of a legal obligation to pay.
(b) Revenue recognition:
Government transfers are recognized as revenues when the transfer is authorized and any
eligibility criteria are met, except to the extent that transfer stipulations give rise to an
obligation that meets the definition of a liability. Transfers are recorded as deferred revenue
when transfer stipulations give rise to a liability. Transfer revenue is recognized in the
statement of operations as the stipulation liabilities are settled.
Government transfers, contributions, and other amounts are received from third parties
pursuant to legislation, regulation, or agreement and may only be used in the conduct of
certain programs, in the completion of specific work, or the purchase of tangible capital
assets. In addition, certain user charges and fees are collected for which the related services
have yet to be performed. Revenue is recognized in the period when the related expenses
are incurred, services performed, or the tangible assets are acquired.
(c) Investments and investment income:
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. Investment income is reported as
revenue in the period earned.
Page 68 of 264
KITCHENER PUBLIC LIBRARY
Notes to Financial Statements, continued
Year ended December 31, 2022
1. Significant accounting policies (continued):
(d) Endowment investments and income:
Endowment investments received are recorded as financial assets which have the principal
restricted for use. 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.
Income earned on the endowment is used for the purpose specified by the donor. Any
unspent funds earned during the year are deferred for future use.
(e) Deferred revenue:
Deferred revenue represents unspent funds subject to external restrictions as to how the
funds are disbursed. These amounts are subsequently included in revenue when the related
expenditures are made.
(f) Employee future benefits:
The costs of multi-employer defined contribution pension plan benefits, such as the Ontario
Municipal Employees Retirement System ("OMERS") pensions, are the employer's
contributions due to the plan in the period.
(g) 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.
(h) Tangible capital assets:
Tangible capital assets are recorded at cost which includes amounts that are directly
attributable to acquisition, construction, development or betterment of the asset. The cost,
less residual value, of the tangible capital assets, excluding land, are amortized on a straight-
line basis over their estimated useful lives as follows:
Asset Rate
Furniture, fixtures and equipment
Other equipment and vehicle
Computers
Books and audio visual resources
10 - 30 years
8 years
3- 10 years
2- 10 years
Annual amortization is charged in the year of acquisition and in the year of disposal. 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 and also are recorded as revenue.
Page 69 of 264
KITCHENER PUBLIC LIBRARY
Notes to Financial Statements, continued
Year ended December 31, 2022
1. Significant accounting policies (continued):
(i) Use of estimates:
The preparation of financial statements 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 revenues and expenses during the period. Significant estimates include
assumptions used in estimating provisions for accrued liabilities and useful lives of tangible
capital assets.
Actual results could differ from these estimates.
2. Investments:
2022 2021
Cost Market Value Cost Market Value
nvestments:
Guaranteed Investment
Certificate $ 50,000 $ 507494
Endowment Investments:
Guaranteed Investment
Certificate 1007000 100,997
$ 50, 000
100,000
$ 507000
1007000
Page 70 of 264
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KITCHENER PUBLIC LIBRARY
Notes to Financial Statements, continued
Year ended December 31, 2022
4. Deferred revenue:
The deferred revenues, reported on the statement of financial position, are made up of the
following:
5. Capital and special grants:
Each year, the City approves capital and special grants for the Board to purchase specific capital
items.
The capital grants approved for 2022 included $101,959 (2021 - $99,960) for general
renovations, maintenance and upgrading of existing facilities, $334,070 (2021 - $327,517) for
communication infrastructure and technology upgrades, $29,714 (2021 - $29,131) for KPL
Accessibility Fund, $58,367 for resources, furniture and equipment (2021 - $57,222) and $Nil
(2021 - $4,739,897) for the southwest community library.
The portion of these grants and previous year grants that are included in revenue in 2022 is
$4507352 (2021 - $684,727).
6. Special grants:
As directed by the funding agency or terms of any applicable agreements, expenditures are made
to finance, in whole or in part, capital items, replacements and maintenance projects.
In 2022, the Board received various special non-recurring grants and donations totaling $163,628
(2021 - $197,139). The portion of these grants and previous year special grants that are included
in revenue in 2022 is $70,069 (2021 - $211,571). The remainder is included in deferred revenue.
Page 73 of 264
2022
2021
Deferred capital grants
Other
$
479,825
337985
$
3627861
397523
Total deferred revenue
$
5137810
$
4027384
Continuity of deferred capital grants is as follows:
2022
2021
Balance, beginning of year
Investing in infrastructure grant
Contributions used
$
3627861
1687873
(517909)
$
3777292
1977139
(2117570)
Balance, end of year
$
4797825
$
3627861
5. Capital and special grants:
Each year, the City approves capital and special grants for the Board to purchase specific capital
items.
The capital grants approved for 2022 included $101,959 (2021 - $99,960) for general
renovations, maintenance and upgrading of existing facilities, $334,070 (2021 - $327,517) for
communication infrastructure and technology upgrades, $29,714 (2021 - $29,131) for KPL
Accessibility Fund, $58,367 for resources, furniture and equipment (2021 - $57,222) and $Nil
(2021 - $4,739,897) for the southwest community library.
The portion of these grants and previous year grants that are included in revenue in 2022 is
$4507352 (2021 - $684,727).
6. Special grants:
As directed by the funding agency or terms of any applicable agreements, expenditures are made
to finance, in whole or in part, capital items, replacements and maintenance projects.
In 2022, the Board received various special non-recurring grants and donations totaling $163,628
(2021 - $197,139). The portion of these grants and previous year special grants that are included
in revenue in 2022 is $70,069 (2021 - $211,571). The remainder is included in deferred revenue.
Page 73 of 264
KITCHENER PUBLIC LIBRARY
Notes to Financial Statements, continued
Year ended December 31, 2022
7. Pension plan:
The Board makes contributions to the Ontario Municipal Employees Retirement Systems
(OMERS), which is a multi-employer plan, on behalf of its staff. The plan is a defined benefit plan
which specifies the amount of the retirement benefit to be received by the employees based on
the length of service and rate of pay.
During the year, the Board incurred expenses equal to $606,721 (2021 - $607,866) for current
service on behalf of its staff.
The latest available report for the OMERS plan was as at December 31, 2022. At that time the
plan reported a $6.7 billion actuarial deficit, based on actuarial liabilities of $128.8 billion and
actuarial assets of $122.1 billion. Ongoing adequacy of the current contribution rates will need to
be monitored and may lead to increased future funding requirements. As at December 31, 20227
the Board has no obligation under the past service provisions of the OMERS agreement.
8. Accumulated surplus:
The accumulated surplus consists of surplus and reserve funds as follows:
Page 74 of 264
2022
2021
Invested in tangible capital assets
$ 5,0957735
$ 572933309
Endowment investments
1007000
1001000
Reserves set aside by the Board:
Capital fund
3447460
3447460
HR fund
377000
377000
Inclusion fund
677876
199,361
Improvement fund
1357003
1547441
Total reserves
5847339
7357262
Accumulated surplus — unrestricted
—
—
Accumulated surplus
$ 5, 780, 074
$ 67128)571_
Page 74 of 264
KITCHENER PUBLIC LIBRARY
Schedules of Expenses
Year ended December 31, 2022, with comparative information for 2021
Schedule 1 -Personnel
2022 2021
Salaries
$
71328,934
$
7,069,060
Pension benefits
960,071
930,365
Health benefits
5683800
468,940
Employment insurance
1383159
130,852
Sick leave reserve
70,000
70,000
Staff training
56, 990
114536
WS I B
18,041
18,639
$
9,140, 995
$
8, 802, 392
Schedule 2 - Equipment
Amortization
$
5297451
$
4873610
Technology
4071008
405,353
Equipment maintenance
177392
8,867
$
9537851
$
901, 830
Schedule 3 - Facilities
Facilities expenses
$
5167625
$
516,310
Main utilities
236,339
2289337
Country Hills building
445639
499357
Forest Heights utilities
27,681
37,272
Pioneer Park building
11,304
19,018
Grand River Stanley Park building
740
91598
$
837,328
$
859,892
Schedule 4 - Administrative
Professional services
$
1059327
$
99,521
General business
679036
60,771
Stationery
499075
407365
Telephone
21,053
211495
Insurance
20,796
20,389
Postage and delivery
5,232
67337
$
268,519
$
248,878
Schedule 5 - Programs and Publicity
Promotional
$
36,541
$
439005
Public programs
31,955
29,191
$
68,496
$
72,196
Page 75 of 264
llfl
-1 At IAL 1
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE 1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the Directors of The Centre In The Square Inc.
Opinion
We have audited the financial statements of The Centre In The Square Inc. (The Centre),
which comprise:
• the statement of financial position as at December 31, 2022
• the statement of operations and changes in 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 material
respects, the financial position of The Centre as at December 31, 2022, and its results of
operations and changes in accumulated surplus, its changes in net financial assets and its
cash flows for the year then ended in accordance with Canadian public sector accounting
standards.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
auditor's report.
We are independent of The Centre in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
(. :� (" , �
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ill 'h, ,. ,.,� "^r ::,:^ � il':' W.. ��.� li .� �i II I ",�, III m";; tl ����I �i':' III " ... "n.11 , „', r" r p i:',s rill �. it �I�� � W "I :::: �'h III ,. .I. l! � iI a •�':::: il' .,.� 1 �� �1i.
u u u l � .0 II ulnnl E �, Ilium u p III . nm uu w,l� a mu II Y M„p wZ:u
I� Ilnllllia SII IIS �� � Page 76 of 264
IIS �m II�� ��. ry � �.;� u="m,.� � p;.� IIS a II�I'Ih�m� � �I.:lo� "a�;^ �h�rm ��.�II� �� �'II�1 IIIA �.I� II�'�� � ry III.... �...I°
Page 2
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 public sector accounting standards and for such
internal control as management determines is necessary to enable the preparation 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
Centre'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 either
intends to liquidate The Centre or to cease operations, or has no realistic alternative but to
do so.
Those charged with governance are responsible for overseeing The Centre'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 material misstatement, whether due to fraud or error, and to
issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional 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.
Page 77 of 264
Page 3
• 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 Centre's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• 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 Centre'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
Centre 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.
n
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
April 20, 2023
Page 78 of 264
THE CENTRE IN THE SQUARE INC.
Statement of Financial Position
December 31, 2022, with comparative information for 2021
Net Assets
Financial assets:
Cash
Due from City of Kitchener
Accounts receivable (note 2)
Interest receivable
Costs to be recovered
Investments (note 3)
2022 2021
$ 37352,049
$ 318503581
—
48,488
179927751
3581470
3,965
27254
165,235
1227105
15277054
174201930
Total financial assets
71041,054
57802,828
Financial liabilities:
Accounts payable and accrued liabilities
2,8177533
175377203
Due to City of Kitchener
2313407
—
Deferred revenue (note 4)
213937412
27719,131
51442,352
47256,334
Net financial assets
11598702
15461494
Non-financial assets:
Tangible capital assets (note 5)
157636,326
13,270,528
Inventories (note 6)
74,673
831706
Prepaid expenses
1963040
2337609
15, 907, 039
13, 587, 843
Net assets
$ 17, 505, 741
$ 15,134, 337
Accumulated Surplus
Operating fund activities (note 7)
$ —
$ —
Reserves - Performance Development (note 10)
—
—
Reserves - Capital (note 10)
935,502
1,032,161
Reserves - Sustainability (note 10)
2053213
2025230
Reserves - Restricted (note 10)
7289700
6293418
Invested in tangible capital assets
15,6363326
133270,528
Accumulated surplus
$ 17,505,741
$ 151134,337
See accompanying notes to financial statements.
On behalf of the Board:
Director
Director
Page 79 of 264
THE CENTRE IN THE SQUARE INC.
Statement of Operations and Changes in Accumulated Surplus
Year ended December 31, 2022, with comparative information for 2021
Expenses:
Budget 2022
Actual 2022
Actual 2021
Direct:
(note 9)
Revenues:
1,097,814
2,1007203
6747535
Performances
$ 23466,424
$ 23559,785
$ 771,978
Rent - Kitchener -Waterloo Symphony
2241150
2043700
71,625
Capital reserve fund surcharge (note 10)
3899400
2679818
459147
Grants from City of Kitchener - Operating
230009000
210009000
210003000
Grants from City of Kitchener - Capital
744,931
19238,851
602,908
Grants from other
7657000
7067610
4727700
governments - Operating (note 11)
-
459,804
7007971
Grants from other governments - Capital
1,6227454
1,8011926
160,202
Donations
8,000
42,113
157223
Investment income
20,500
112,687
35,828
Sponsorships and memberships
148,293
63,423
26,799
Rent - Kitchener -Waterloo Art Gallery
1075222
1079222
105,120
Lottery revenue
-
7,421
42,951
Other
1929000
4909618
177,779
Gain on sale of investments
-
829435
23026
Total revenue
71923,374
91438,803
477583557
Expenses:
Direct:
Performances
1,097,814
2,1007203
6747535
Recovery of performance costs
-
-
(27126)
Operating:
Administration
6247354
575,081
4287517
Marketing
1057000
64,733
519611
Lottery expenses
-
71796
417568
Occupancy
7657000
7067610
4727700
Salaries and wages
2,411,866
27522,922
2,1167580
Sponsorship
-
287118
57415
Amortization
1,270,000
1,055,000
985,732
Loss on disposal and write-down of tangible
capital assets
50,000
87709
507108
Reserves expenditures (recovery) (note 10)
55,000
(1,773)
39,497
Total expenses
6, 379, 034
710677399
47864Y137
Excess (deficiency) of revenue over expenses
175447340
273717404
(105,580)
Accumulated surplus, beginning of year
15,1347337
15,134,337
157239,917
Accumulated surplus, end of year
16,6787677
$ 175057741
$ 157134,337
See accompanying notes to financial statements.
Page 80 of 264
THE CENTRE IN THE SQUARE INC.
Statement of Changes in Net Financial Assets
Year ended December 31, 2022, with comparative information for 2021
2022 2021
Excess (deficiency) of revenue over expenses
$ 2,3717404
$ (105,580)
Acquisition of tangible capital assets
(314327107)
(130087270)
Amortization of tangible capital assets
110551000
9857732
Write-down of tangible capital assets
—
503108
Loss on sale of tangible capital assets
83709
—
5, 606
(78, 010)
Net use (acquisition) of inventories
9,033
(26,138)
Net use (acquisition) of prepaid expenses
37,569
(105,705)
46, 602
(131, 843)
Increase (decrease) in net financial assets
52,208
(2097853)
Net financial assets, beginning of year
115467494
177563347
Net financial assets, end of year
$ 175981702
$ 175467494
See accompanying notes to financial statements.
Page 81 of 264
THE CENTRE IN THE SQUARE INC.
Statement of Cash Flows
Year ended December 31, 2022, with comparative information for 2021
2022
Operating activities:
Excess (deficiency) of revenue over expenses $ 233717404
Items not involving cash:
Amortization 130557000
Loss on sale of tangible capital assets 83709
Write-down of tangible capital assets —
Change in non-cash operating working capital (398,014)
Cash provided by operating activities 370377099
Capital activities:
Cash used to acquire tangible capital assets (33432,107)
Cash proceeds on sale of tangible capital assets 27600
Cash used in capital activities (314293507)
Investing activities:
Cash used in purchasing of investments (106,124)
Increase (decrease) in cash
Cash, beginning of year
(498,532)
338507581
2021
$ (1057 580 )
9853732
50,108
27622,576
37 552, 836
(17008,270)
(130087270)
(17,307)
2,527,259
17323,322
Cash, end of year $ 37352,049 $ 338507581
See accompanying notes to financial statements.
Page 82 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements
Year ended December 31, 2022
The mission of The Centre In The Square Inc. ("The Centre"), is to create memorable experiences. It
is incorporated as a not-for-profit corporation without share capital, is exempt from income taxes
under the Income Tax Act, and is a registered charity. The Centre is a governed by a Board of
Directors and receives an operating grant from the City of Kitchener ("The City").
1. Significant accounting policies:
The financial statements of The Centre are the representation of management and have been
prepared in accordance with Canadian generally accepted accounting principles for local
governments as established by the Public Sector Accounting Board (PSAB) of the Chartered
Professional Accountants of Canada.
(a) Basis of accounting:
The Centre 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 or services
and/or the creation of a legal obligation to pay.
(b) Revenue recognition:
Performance revenue is recognized when the show occurs. Deferred gift certificate revenue
is an estimate based upon gift certificate sales during the period from July 1 to December 31
of the current year.
Government transfers are recognized as revenues when the transfer is authorized and any
eligibility criteria are met, except to the extent that transfer stipulations give rise to an
obligation that meets the definition of a liability. Transfers are recorded as deferred revenue
when transfer stipulations give rise to a liability. Transfer revenue is recognized in the
statement of operations as the stipulation liabilities are settled.
Government transfers, contributions, and other amounts are received from third parties
pursuant to legislation, regulation, or agreement and may only be used in the conduct of
certain programs, in the completion of specific work, or the purchase of tangible capital
assets. In addition, certain user charges and fees are collected for which the related services
have yet to be performed. Revenue is recognized in the period when the related expenses
are incurred, services performed, or the tangible assets are acquired.
(c) Investments:
Investments are recorded at the lower of cost or market value on a fund portfolio basis.
Interest income and all expenses are fully accrued.
(d) Employee future benefits:
The costs of multi-employer defined contribution pension plan benefits, such as the Ontario
Municipal Employees Retirement System ("OMERS") pensions, are the employer's
contributions due to the plan in the period.
Page 83 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
1. Significant accounting policies (continued):
(e) 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.
(i) Tangible capital assets:
Tangible capital assets are recorded at cost which includes amounts that are directly
attributable to acquisition, construction, development or betterment of the asset. The
cost, less residual value, of the tangible capital assets, excluding land, is amortized on a
straight-line basis over their estimated useful lives as follows:
Asset
Rate
Buildings
5 - 100 years
Equipment
4 - 50 years
Computers
3 - 10 years
Software
3 years
Site
2 - 50 years
Annual amortization is charged in the year of acquisition and in the year of disposal.
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 and also are recorded as revenue.
(ii) Inventories:
Bar stock inventories are valued at the most recent replacement cost. Supplies
inventories are valued at the lower of cost and net realizable value on a first -in, first -out
basis. Net realizable value is defined as replacement cost.
(f) Use of estimates:
The preparation of financial statements 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 revenues and expenses during the period. Significant estimates include
assumptions used in estimating provisions for accrued liabilities and useful lives of tangible
capital assets.
Actual results could differ from these estimates.
Page 84 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
2. Accounts receivable:
2022 2021
Accounts receivable
$ 119927751
$
2133739
Canada Emergency Wage Subsidy receivable
—
1447731
Allowance for doubtful accounts
—
—
$ 1, 992, 751
$
3581470
3. Investments:
Investments consist of:
Carrying value
Market
Carrying value
Market
2022
2022
2021
2021
Cash
$ 19,212
$ 19,212
$ 28,735
$
287735
Guaranteed Investment
Certificates
7687350
7687350
7567185
756,185
Fixed income
4607951
4327205
3547768
3537727
Equities
278541
434,206
2817242
5647401
$ 175277054
$ 17 653, 973
$ 1,420, 930
$
137037048
4. Deferred revenue:
Deferred revenue consists of the following:
2022
2021
Performances
$ 270593807
$
234967475
Gift certificates
983233
893560
Sponsorships
537311
50,756
Other
1717966
807483
Membership
107095
17857
$ 27393,412
$
2, 719,131
Page 85 of 264
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THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
6. Inventories:
2,100, 203
6747535
—
Inventories consist of the following:
(2)126)
624,354
575, 081
428,517
105,000
2022
2021
Bar stock
$
721798 $
827782
Supplies
4727700
11875
924
2,116, 580
$
74, 673 $
837706
7. Operating fund activities:
Budget
Actual
Actual
2022
2022
2021
Revenues:
Performances
$ 2,3103664
$ 2,5593785 $
771,978
Rent - Kitchener -Waterloo Symphony
2241150
204700
711625
Grants from City of Kitchener
210003000
2,0001000
27000,000
Grants, other governments
—
4591804
700,971
Donations
61000
39449
12,961
Investment income
16,000
71,743
67560
Sponsorships and memberships
1487293
63,423
261799
Rent - Kitchener -Waterloo Art Gallery
1071222
107,222
1051120
Lottery revenue
—
77421
42,951
Other
1921000
490, 618
1777779
Total revenue
Expenditures:
Direct:
Performances
Unrecoverable performance costs
Operating:
Administration
Marketing
Lottery expenses
Occupancy
Salaries and wages
Sponsorship
5, 004, 329 6, 004,165 379167744
1, 097, 814
2,100, 203
6747535
—
—
(2)126)
624,354
575, 081
428,517
105,000
641733
51,61 1
—
7, 796
41568
765, 000
706, 610
4727700
2, 411, 866
2, 522, 922
2,116, 580
—
287118
5,415
Total expenditures 530041034 6, 005,463 33 788, 800
Operating fund net revenues (deficiency)
before amortization 295 (11298) 127,944
Transfer from (to) reserve funds (note 10) (295) 649 (127,944)
Transfer from City of Kitchener — 649 —
Fund balances, end of year $ — $ — $ —
Page 88 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
8. Economic dependence:
The Centre is economically dependent on the City of Kitchener during the pandemic to provide
sufficient funds to continue operations and capital projects.
9. 2022 budget:
The original budgeted figures were approved by the Board of Directors at their meeting on
August 21, 2021 and included certain expenses and offsetting recoveries on a net basis.
10. Schedule of reserve funds:
(a) Performance Development Reserve Fund:
The Centre has an agreement with the City, whereby The Centre's annual operating net
revenue is shared equally between the City and The Centre.
At the direction of the Board of Directors, transfers are made to and from the
Performance Development reserve funds.
(b) Capital Reserve Fund:
The Capital Reserve Fund represents the collection of a surcharge from the sale of
tickets.
At the direction of the Board of Directors, expenditures from the Capital Reserve Fund
are made to finance, in whole or in part, major capital items, replacements and major
maintenance projects.
In 2022, The Centre's Board of Directors approved transfers out of the Capital Reserve
Fund for major capital asset projects of $3,432,107 (2021 - $1,008,270).
(c) Sustainability Reserve Fund:
Revenues from the Sustainability Reserve Fund come from fundraising contributions. At
the direction of the Board of Directors, funds are allocated for specific capital projects and
programming initiatives.
(d) Restricted Fund:
The Restricted Fund was set up by the Board of Directors of The Centre in 2000 by a
transfer of investments from the Sustainability Reserve Fund in accordance with the
Restricted Fund Policy. Income from this fund is to be used for capital requirements,
special projects and/or new programming initiatives that help further The Centre's
mandate.
Page 89 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
10. Schedule of reserve funds (continued):
Performance
Total
Development
Capital Sustainability
Restricted
Funds
Revenue:
Donations and sundry $ —
—
$ —
$ 27664
$ 27664
Grants from City
of Kitchener —
15238,202
—
—
17238,202
Grants, other governments
and foundations —
17801,926
—
—
17801,926
Ticket surcharge —
2671818
—
—
2677818
Investment income —
127135
31632
25,177
401944
Gain on investments —
—
—
827435
827435
Total revenue —
31320,081
31632
110,276
37433,989
Expenses:
Professional fees —
—
—
107994
107994
Capital costs (recovery) —
(12,767)
—
—
(127767)
(127767)
—
107994
(17773)
Recovery of loss on disposal of
capital assets —
(27600)
—
—
(27600)
Total expenses —
(15,367)
—
103994
(47373)
Excess of revenue
over expenses —
373357448
3,632
99,282
3,4387362
Balance, beginning of year —
110321161
2027230
6297418
178637809
Transfer to accumulated
surplus - tangible
capital assets (note 10 (b)) —
(31432,107)
—
—
(3)432,107)
Transfer to operating (note 7) —
—
(649)
—
(649)
Balance, end of year $ —
$ 935,502
$ 205,213
$ 728,700
$ 11869,415
11. COVID-19 funding:
During the year, The Centre received $276,072 in Tourism and Hospitality Recovery Program
subsidy, $83,732 in Canada Recovery Hiring Program and these amounts are recorded in the
statement of operations under Grants from other governments - Operating (2021 - $700,971 in
Canada Emergency Wage Subsidy).
Page 90 of 264
THE CENTRE IN THE SQUARE INC.
Notes to Financial Statements, continued
Year ended December 31, 2022
12. Pension agreements:
The Centre belongs to the Ontario Municipal Employees Retirement Fund (OMERS), which is a
multi-employer plan, on behalf of the members of its staff. This plan specifies the amount of the
retirement benefit to be received by the employees based on the length of service and rates of
pay. Because OMERS is a multi-employer pension plan, any pension plan surpluses or deficits
are the joint responsibility of Ontario municipal organizations and their employees. As a result,
The Centre does not recognize any share of the OMERS pension surplus or deficit.
The latest available report for the OMERS plan was December 31, 2022. At that time the plan
reported a $6.7 billion actuarial deficit (2021 - $3.1 billion actuarial deficit), based on actuarial
liabilities of $128.8 billion (2021 - $119.3 billion) and actuarial assets of $122.1 billion (2021 -
$116.2 billion). Ongoing adequacy of the current contribution rates will need to be monitored and
may lead to increased future funding requirements.
The 2022 employer portion of OMERS pension contributions was $163,271 (2021 - $124,413).
13. Comparative information:
The financial statements have been reclassified, where applicable, to conform to the presentation
used in the current year. The changes do not affect prior year excess of revenue over expenses.
Page 91 of 264
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the Mayor and Members of Council, Inhabi
the City of Kitchener 111111411
Opinion
We have audited the stateme
ended December 31, 2022 c
Enterprise (the Entity) (Hereinaf
In our opinion, the
respects, the stat
December 31, 2 ;
relevant to pr, p,@,rin(
Basi
tepayers of The Corporation of
and accumulated surplus for the year
�of the City of Kitchener Gasworks
t e financial statement ).
'hancial statement presents fairly, in all material
and accumulated surplus for the year ended
th Canadianublic sector accounting standards
p g
statement.
We condu o audit in accordance with Canadian generally accepted auditing
standards.sponsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
Auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
IMJII III AG ai m � u�u� �� � w
n�,�� III����uiV�� ���� III��.�V:�ulllu�'�,� Il���u�u��w���"null�� �::��u�.� u�ut��. ���Ilu�w�: llluirum� gall ������. III � II����� &�4ll ougaunui .aIluoni dl ubdprude,rut
ulluru w .ilV . I coru1�,11 1 'm �l w luemu Illu��� I a ���, In° li I��l�
Ill fl i a
airiada IIpi rcr,111 de s serns ili c s IL) Ili A
Page 92 of 264
Page 2
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 public sector accounting standards and for such
internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, manage's responsible for assessing the
Entity's ability to continue as a going concern, osiapplicable matters related to
going concern and using the going concasis of a G nting unless management
either intends to liquidate the Entity or ase o erations, % as no realistic alternative
but to do so.
Those charged with governanc are resp le for overseeing the Entity's financial
Irl
reporting
p g p rocess.
Auditor's Respon
Our objectives
statements as a
and to issueegzai,
Reas°�
conduct",
f
always det
it of the Financial Statements
in rea° fable assurance about whether the financial
aterial misstatement whether due to fraud or error,
port that includes our opinion.
is a high level of assurance, but is not a guarantee that an audit
ce with Canadian generally accepted auditing standards will
al 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 of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards,
we exercise professional judgment and maintain professional 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.
Page 93 of 264
g11PnaLYMAIALIMA
Page 3
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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures ma IIIIImanagement.
• Conclude on the appropriateness of manage f se of the going concern basis of
accountingand based on the audit evade obtain hether a material uncertainty
� ,� Y
exists related to events or conditions may cast si /i t, ' ant doubt on the Entity s
abilityto continue as a going con. If ,conclude hat a material uncertainty
g g �% Y
exists, we are required to draw a ` �'in our Auditor's report to the related
disclosures in the financial atements� if such disclosures are inadequate, to
modify our opinion. Our con f re ba ,on the audit evidence obtained up to
the date of our Auditor's repo ���I Ho �� lure events or conditions may cause the
Entit Y to cease to co as a' orf concern.
• Evaluate the o IImtatio re tructure and content of the financial statements
p �+
including the Jl' los ��////' �������������������„ hether the financial statements represent the
underlyin nsa and events in a manner that achieves fair presentation.
• Com ��'icate ,if th
�c,har ed with governance regarding,among other matters
the ` ` ned scop jnd timing of the audit and significant audit findings, including any
si nifi f deficie s in internal control that we identify during our audit.
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
11111:7_1aI
Page 94 of 264
THE CORPORATION OF THE CITY OF KITCHENER
GASWORKS ENTERPRISE
Statement of Operations and Accumulated Surplus
For the Year Ended December 31, 2022
2022 2022 2021
Budget
DELIVERY OPERATIONS
Gas delivery
Revenue $ 41,290,695 $ 43,591,449 $ 3974221933
Expenses 23,334,805 24,269,576 2271151361
17,955,890 19,321,873 17,307, 572
Other programs
(Customer service, rental water heaters &financing)
Revenue 11,595 12,2839189 1127831442
Expense,, 8,3 19 814839798 77601,985
9,246 31799,391 4,1817457
Dispatch
Revenue ,859 7121234 6061280
Expenses 791859 7121234 6061280
Excess of revenue over expenses ,136 23,1219264 217489,029
Accumulated surplus -Delivery
Balance, beginning of year 191,004,746 191,004,746 184,701,184
Interest revenue 34,527 84,521 467104
Transfer to gas investment reserve fff(1595369202) (15,536,202) (15,231,571)
Excess of revenue over eye 21,175,136 23,121,264 2174891029
Balance, end of year 196,678,207 198,674,329 19170041746
SUPPLY OPERATIONS /� �%
G% r����� 33 792 932 40,3209864 28 546 577
Revenue ////////////////G�i,
Expenses 3555349597 3759569435 297232,320
Excess/(deficiency) of revenue over expenses (1,741,665) 25364,429 (6855743)
Accumulated surplus - Supply
Balance, beginning of year
3,598,854
3,598,854
472391900
Interest revenue
34,313
75,336
441697
Excess/(deficiency) of revenue over expenses
(1,741,665)
2,3641429
(685,743)
Balance, end of year
$ 11891,502 $
61038,619 $
37598,854
Page 95 of 264
MANAGEMENT REPORT
Management's Responsibility for Financial Reporting
The accompanying financial statements of Kitchener Generation Corporation are the responsibility of
management and have been prepared in accordance with Canadian public sector accounting
standards. The significant accounting policies followed by Kitchener Generation Corporation are
described in the Significant Accounting Policies contained in Note 2 of 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 financial statements have been prepared within reasonable
limits of materiality and in light of information available up to June 26, 2023.
Management maintained a system of internal controls designed to pro
the assets were safeguarded and that reliable information was
system included formal policies and procedures and an organiza
appropriate delegation of authority and segregation of res onsies.
KITCHENER GENERATION CORPORATION
On behalf of management,
Jonathan Lautenbach, CPA, CGA
Chief Financial Officer and City Tr
June 26, 2023
Kitchener, Canada
reasonable assurance that
able on a timely basis. The
structure that provided for the
Page 96 of 264
KITCHENER GENERATION CORPORATION
Statement of Financial Position
As at December 31, 2022
(Unaudited)
2022 2021
Financial assets
Accounts receivable $ 119478 $ 71676
111478 77676
Liabilities
Due to the Corporation of the City of Kitchener 111476 71674
Long-term debt (Note 3) 1,672,213 178811239
11683,689 17888,913
Net financial debt /% (19672,211) (1,881,237)
Non-financial assets
Tangible capital assets (Note 4
118589012 27090,264
1,858,012 210907264
Shareholder's equity Note 5 185,801 209 027
The accompanying notes are an integral part of these financial ""',dents.
Page 97 of 264
KITCHENER GENERATION CORPORATION
Statement of Operations
For the Year Ended December 31, 2022
(Unaudited)
2022 2022 2021
Budget
Revenue
Sale of electricity $ 385,000 $ 386,220 $ 401,175
Total revenue 385,000 386,220 4011175
Expenses
Maintenance
20,000
10,400
-
Amortization of tangible capital assets
232,252
232,252
2321252
Total expenses
2523252
2429652
232,252
Surplus before interest and provision for payments -
in -lieu of corporate income taxes
132 -
1439568
168,923
Interest expense
x,250 �
941250
104,809
Surplus before provision for payments -in -lieu of
corporate income taxes
for payments -in -lieu of corporate income
/ 38,498
FROProvision ..
/
49,318
641114
taxes
-
-
-
Annual surplus
The accompanying notes are an integral part of these fi
$ ;x,498 $ 49,318 $ 641114
stat"'tb'ents.
Page 98 of 264
KITCHENER GENERATION CORPORATION
Statement of Change in Net Financial Debt
For the Year Ended December 31, 2022
(Unaudited)
2022 2021
Annual surplus
$ 499318
$ 641114
Change in share capital
(23,226)
(23,417)
Dividends
(49,318)
(56,589)
Amortization of tangible capital assets
2321252
2321252
Change in net financial debt
209,026
2161360
Net financial debt, beginning of year
(1,881,237)
(27097,597)
Net financial debt, end of year
$ (11672,211)
$ (1)881,237)
The accompanying notes are an integral part of [hese financial statements.
............
Page 99 of 264
KITCHENER GENERATION CORPORATION
Statement of Cash Flow
For the Year Ended December 31, 2022
(Unaudited)
2022 2021
Operating
Annual surplus
$ 499318 $
64,114
Items not involving cash
(49,318)
(56,589)
Amortization of tangible capital assets
2321252
2321252
Change in non-cash assets and liabilities
Trade and other accounts receivable
(39802)
31070
Accounts payable and accrued liabilities
3,802
(81674)
Net chanae in cash from oaeratina activities
%i%% 281.570
290.762
Financing
Change in share capital
Change in long-term debt
Dividends paid
Net change in cash from financing activities
Net change in cash and cash equivalentc.
Cash and cash equivalents, beginning of ye
Cash and cash equivalents end of near
ar
The accompanying notes are an integral pa fin dial statements.
(23,226)
(23,417)
(209,026)
(2105756)
(49,318)
(56,589)
(281.570)
(290.762)
Page 100 of 264
KITCHENER GENERATION CORPORATION
Notes to the Financial Statements
For the Year Ended December 31, 2022
(Unaudited)
1.
2.
3.
Incorporation
On December 9, 2011 Kitchener Generation Corporation (the Company) was incorporated under the Business
Corporations Act (Ontario). Effective January 1, 2012, the Corporation of the City of Kitchener transferred the
solar roof asset constructed on the surface of the Kitchener Operations Facility to the Company in exchange for
100% of the Company's common shares and interest bearing debt.
Summary of significant accounting policies
These financial statements of the Company have been prepared by management in accordance with Canadian
generally accepted accounting principles for public sector entities s established by the Public Sector
Accounting Board of the Chartered Professional Accountants of Can The following is a summary of the
T
significant accounting policies followed in the preparation of these firs,% ial statements:
a. Basis of accounting
Tangible capital assets are recorded at cost �h amounts that are directly attributable to
acquisition, construction, development or„ 4,e er ,,,,;,,,the asset. The cost less residual value of the solar roof
asset is amortized on a straight-line b "" �"""" ' its es0' ted useful life of nineteen years.
c. Revenue recognition
The Company records revenue le of elecfricity on the basis of regular meter readings and estimates
AA/d/d/sT
��������i
of energy generation sincelle, ding to the end of the year.
d. Use of estimates
The preparation of the fifi��ial stat/J'ents requires management to make estimates and assumptions that
affect the reported amounts as "' and liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statement
the reported amounts of revenues and expenses during the year. These
W.estimates and assumptions, incling the valuation oftongible capital assets and their related useful lives and
amortization are based on management's best information and judgment and may differ significantly from
future actual results.
Long-term debt
Effective January 1, 2012 the Company issued an unsecured promissory note payable to the Corporation of the
City of Kitchener. Payments are made annually including interest and principal. Interest is calculated at the fixed
rate of 5.01 % per annum. Interest paid in 2022 amounted to $94,250 (2021 - $104,809).
Page 101 of 264
KITCHENER GENERATION CORPORATION
Notes to the Financial Statements
For the Year Ended December 31, 2022
(Unaudited)
4. Tangible capital assets
Accumulated Net Book
Cost Amortization Value
Opening balance $ 41412,784 $ (2,3229520) $ 2,0901264
Additions - - -
Amortization - (232,252) (232,252)
Disposals - - -
Endina balance
5. Shareholder's equity
Shareholder's equity consists of the following:
Share capital - common shares (Note 6)
Retained earnings
6. Share capital
Authorized
Unliitd
mecommon share
Issued
1,000 common shares
$ 41784 $ (295545772) $ 138589012
2022 2021
$ 1859801 $ 209,027
$ 1859801 $ 2091027
Page 102 of 264
MA P
KPMG LLP
120 Victoria Street South
6th Floor
Kitchener ON N2G OE1 Canada
Tel 519-747-8800
Fax 519-747-8830
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Kitchener Power Corp.
Opinion
We have audited the consolidated financial statements of Kitchener Power Corp. (the
Entity), which comprise:
• the consolidated statementof financial position as at August 31, 2022
• the consolidated statement of comprehensive income for the period January 1, 2022 to
August 31, 2022
• the consolidated statement of changes in equity for the period January 1, 2022 to August
3132022
• the consolidated statement of cash flows for the period January 1, 2022 to August 31,
2022
• and notes to the consolidated 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 material respects,
the consolidated financial position of the Entity as August 31, 2022, and its consolidated
financial performance and its consolidated cash flows for the period January 1, 2022 to
August 31, 2022 in accordance with International Financial Reporting Standards (I FRS).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
a ur i Ontario Ill a ur urs a lf. d Ill a4Vo a 111 u t yur urs r urs ll w ���� ur Ill urr m"n� ,!�.AU Ihiii,� OI o, IP S1411 cirgainuzafloin U1 a ungde� Ilie� n de� in� t
...p "1 .��� wrwiubwfiS :� iled n ,ii i �itoa or/,�Ito IIII, shi
I
��.��� i�v.i � �
Page 103 of 264 �����:
SA P
Page 2
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 International Financial Reporting Standards (IFRS), and for
such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for
assessing the Entity'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 either intends to liquidate the Entity or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Entity's financial
reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the consolidated 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.
Page 104 of 264
MA P
Page 3
• 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 Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• 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 Entity'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 Entity 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group Entity to express an opinion on the
financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
Z4P
1,111111111 111��Ijjjj
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
December 20, 2022
Page 105 of 264
KITCHENER POWER CORP.
Consolidated Statement of Financial Position
As at August 31, 2022, with comparative information for 2021
(Expressed in thousands of dollars)
Assets
Current assets
Cash
Accounts receivable
Unbilled revenue
Inventory
Prepaid expenses
Income taxes receivable
Total current assets
Non-current assets:
Property, plant and equipment
Intangible assets
Deferred tax assets
Investment in subsidiaries and associates
Total non-current assets
Note 2022 2021
4 $ - $
6,079
5 207687
217287
177707
147705
6 37493
37080
930
17082
727
30
43, 544
461263
7 2877778
279Y444
8 10, 556
11,185
9 315
302
849
893
299, 498
2917824
Total assets 343,042 338,087
Regulatory deferral account debit balances 10 297768 25,396
Total assets and regulatory assets $ 372,810 $ 363,483
Page 106 of 264
KITCHENER POWER CORP.
Consolidated Statement of Financial Position
As at August 31, 2022, with comparative information for 2021
(Expressed in thousands of dollars)
Non-current liabilities:
Long-term debt
Note
2022
2021
Liabilities and Shareholder's
Equity
Long-term customer deposits
13 57443
Current liabilities:
Long-term portion of lease liabilities
17 552
556
Short term indebtedness
$
3,033 $
-
Accounts payable and accrued liabilities
8,675
29,336
327821
Dividend payable
2,400
-
Current portion of lease liabilities
77
42
42
Current portion customer deposits
13
10,687
8,530
Current portion of deferred revenue
1,257
11185
Total current liabilities
465755
427578
Non-current liabilities:
Long-term debt
11 76,963
76,963
Employee future benefits
12 67068
67012
Long-term customer deposits
13 57443
57675
Long-term portion of lease liabilities
17 552
556
Deferred revenue
46,144
447451
Deferred tax liablilty
9 9,478
8,675
Total non-current liabilities
144,648
1427332
Total liabilities
1917403
1847910
Shareholder's equity:
Share capital - common shares
Retained earnings
Accumulated other comprehensive loss
Total shareholder's equity
14 66,389
667389
108,127
108,261
(620)
(620)
173, 896
174, 030
Total liabilities and shareholder's equity 3657299 3587940
Regulatory deferral account credit balances 10 37430 779
Deferred taxes associated with regulatory accounts 47081 37764
Total equity, liabilities and shareholder's equity $ 372,810 $ 3631483
Lupo, Ciii Nig
Tim Martin, /ice -Chair
Page 107 of 264
KITCHENER POWER CORP.
Consolidated Statement of Comprehensive Income
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
Note 2022 2021
Energy sales $ 145,100 $ 2059727
Cost of energy sold 149,500 2083472
(4,400) (2, 745)
Other operating revenue
Distribution sales 347658 45,033
Other income 15 2, 248 3,319
Net operating revenue 32,506 45,607
Expenses:
Operations and maintenance 83598 113552
Customer services 43503 53674
Administration 4,108 61452
Amortization 81001 107977
Income before income taxes 57744 8,467
Income tax recovery 9 (35) (520)
Income for the period before movements
in regulatory deferral account balances 57779 81987
Net movement in regulatory deferral account balances
related to profit or loss and the related deferred
tax movement 10 1, 057 2, 208
Income for the year and net movements in
regulatory deferral account balances 67836 117195
Total comprehensive income for the period $ 63836 $ 113195
The accompanying notes are an integral part of these financial statements.
Page 108 of 264
257210
341655
Other
Energy conservation program revenue
(591)
(1,262)
Energy conservation program expense
340
11277
Net energy conservation programs
(251)
15
Finance income
16 (41)
(39)
Finance charges
16 17844
21509
Net finance costs
17803
2,470
Income before income taxes 57744 8,467
Income tax recovery 9 (35) (520)
Income for the period before movements
in regulatory deferral account balances 57779 81987
Net movement in regulatory deferral account balances
related to profit or loss and the related deferred
tax movement 10 1, 057 2, 208
Income for the year and net movements in
regulatory deferral account balances 67836 117195
Total comprehensive income for the period $ 63836 $ 113195
The accompanying notes are an integral part of these financial statements.
Page 108 of 264
KITCHENER POWER CORP.
Consolidated Statement of Changes in Equity
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
Net income before other comprehensive income (loss) - - 6,836 6,836
Dividends - - (6,970) (6,970)
Balance at August 31, 2022 $ 66,389 $ (620) $ 108,127 $ 173,896
The accompanying notes are an integral part of these financial statements.
Page 109 of 264
Accumulated
Share capital
other
Retained
Total
comprehensive
earnings
income (loss)
Balance at January 1, 2021 $ 66,389
$ (620)
$ 101,452 $
1671221
Net income before other comprehensive income (loss, -
-
111195
11)195
Dividends -
-
(4,386)
(4,386)
Balance at December 31, 2021 66,389
(620)
108,261
174,030
Net income before other comprehensive income (loss) - - 6,836 6,836
Dividends - - (6,970) (6,970)
Balance at August 31, 2022 $ 66,389 $ (620) $ 108,127 $ 173,896
The accompanying notes are an integral part of these financial statements.
Page 109 of 264
KITCHENER POWER CORP.
Consolidated Statement of Cash Flows
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
Change in non-cash operating working capital:
Accounts receivable
2022
2021
Cash flows from operating activities:
(3,002)
15,159
Total comprehensive income for the period $
6,836 $
11,195
Adjustments to reconcile net income to cash provided by (used in) operations:
152
64
Amortization
81510
11, 690
Amortization of deferred revenue
(826)
(1,140)
Gain on disposal of property, plant and equipment
(56)
(51)
Income tax expense
(35)
(520)
I ncome taxes paid
(750)
353
Interest on Lease Liability
24
24
Income from subsidiaries and associates
44
(55)
Increase decrease in employee future benefits
56
75
13,803
21,571
Change in non-cash operating working capital:
Accounts receivable
600
(5,580)
Unbilled revenue
(3,002)
15,159
1 nventory
(413)
(622)
Prepaid expenses
152
64
Accounts payable and accrued liabilities
(3,485)
(4,923)
Other current liabilities
2,229
(299)
Change in regulatory debit balances
(4,372)
(5,735)
Change in regulatory credit balances
2,968
47
Change in deferred tax
878
4,282
Net cash from operating activities
91358
23,964
Cash flows from investing activities:
Proceeds on disposals of property, plant and equipment 57 370
Purchase of property, plant and equipment (15,977) (22,644)
Purchase of intangible assets (239) (3,733)
Net cash used in investing activities (16,159) (26,007)
Cash flows from financing activities:
Net change in Short term indebtedness
3, 033
-
Net change in customer deposits
(232)
(158)
Dividends paid out
(4,570)
(4,386)
Change in contributed capital received
2,519
5,832
Payment of lease liability
(28)
(27)
Net cash from financing activities
722
1,261
Change in cash and cash equivalents (6,079) (782)
Cash and cash equivalents, beginning of period 65079 6,861
Cash and cash equivalents, end of period $ - $ 6,079
The accompanying notes are an integral part of these financial statements.
Page 110 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
1. Reporting entity:
Kitchener Power Corp. (the "Corporation") is a holding company for the affiliate companies,
Kitchener -Wilmot Hydro Inc. and Kitchener Energy Services Inc., and is itself wholly owned by the
Corporation of the City of Kitchener and the Corporation of the Township of Wilmot.
The Corporation oversees the operations of Kitchener -Wilmot Hydro Inc., a regulated distribution
company, and Kitchener Energy Services Inc., an unregulated retail services company. The
Corporation also owns 33% of Grand River Energy Solutions Corp. (GRE), a generation and
renewable energy solutions company.
It is located in the City of Kitchener. The address of the Corporation's registered office is 301
Victoria Street South, Kitchener, Ontario, Canada.
The financial statements are for the Corporation as at and for the period ended August 31, 2022.
On January 12, 2022, the Corporation entered into a Merger Participation Agreement ("MPA") with:
the Corporation of the City of Kitchener ("Kitchener"); the Corporation of the Township of Wilmot
("Wilmot"); the Corporation of the City of Waterloo ("Waterloo"); the Corporation of the Township of
Woolwich ("Woolwich"); the Corporation of the Township of Wellesley ("Wellesley"); Kitchener -
Wilmot Hydro Inc.,("KWHI"); Kitchener Energy Services Inc.("KESI"); Waterloo North Hydro Inc.
("WNH"); Waterloo North Holding Corporation ("WNHC"): and Alliance Metering Solutions ("AMS").
WNHC is the parent company of WNH and AMS.
The MPA provided the terms and conditions under which the Corporation and WNHC would
amalgamate (the "MergeCo Amalgamation"), followed immediately by the amalgamation of the
KWHI and WNH ("LDC Amalgamation"). The LDC Amalgamation was subject to the approval of
the Ontario Energy Board ("OEB") based on a Mergers, Acquisitions, Amalgamations and
Divestitures Application ("MAADs Application") process. The MAADs Application included a
request for OEB approval for the continuation of regulated rates and charges of the predecessor
LDCs of the Corporation. On June 28, 2022, the OEB issued a Decision and Order approving the
LDC Amalgamation.
The MergeCo Amalgamation occurred on August 31, 2022 (the "closing date") and the Corporation
continues as Enova Energy Corporation, a corporation amalgamated under the laws of Ontario.
On August 31, 2022, immediately following the MergeCo Amalgamation, the KWHI and WNH
legally amalgamated and continues as Enova Power Corp., a corporation amalgamated under the
laws of Ontario.
2. Basis of presentation:
(a) Statement of compliance:
The Corporation's financial statements have been prepared in accordance with International
Financial Reporting Standards ("I FRS"). The financial statements were approved by the Enova
Energy Corporation Board of Directors on December 16, 2022.
Page 111 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
2. Basis of presentation (continued):
(b) Basis of measurement:
The financial statements have been prepared on the historical cost basis except for the
following:
(i) Where held, financial instruments at fair value through profit or loss
(ii) Contributed assets are initially measured at fair value.
The methods used to measure fair values are discussed further in note 23.
(c) Functional and presentation currency:
These financial statements are presented in Canadian dollars, which is the Corporation's
functional currency. All financial information presented in Canadian dollars has been rounded
to the nearest thousand.
(d) Use of estimates and judgments:
The preparation of financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses and disclosure of contingent
assets and liabilities. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and in
any future periods affected.
Information about critical judgments in applying accounting policies that have the most
significant effect on the amounts recognized in these financial statements is included in the
following notes:
i) Note 3(b) — Determination of the performance obligation for contributions from customers
and the related amortization period
ii) Note 7 — Property, plant and equipment
iii) Note 9 — Deferred tax assets
iv) Note 12 — Employee future benefits
v) Note 18 — Commitments and contingencies
(e) Rate regulation:
The Corporation is regulated by the Ontario Energy Board ("OEB"), under the authority granted
by the Ontario Energy Board Act, 1998. Among other things, the OEB has the power and
responsibility to approve or set rates for the transmission and distribution of electricity, providing
continued rate protection for electricity consumers in Ontario, and ensuring that transmission
and distribution companies fulfill obligations to connect and service customers. The OEB may
also prescribe license requirements and conditions of service to local distribution companies
("LDCs"), such as the Corporation, which may include, among other things, record keeping,
Page 112 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
2. Basis of presentation (continued):
(e) Rate regulation (continued):
regulatory accounting principles, separation of accounts for distinct businesses, and filing and
process requirements for rate setting purposes.
Rate setting:
Distribution revenue and electricity rates
The OEB sets electricity prices for low-volume consumers once each year based on an
estimate of how much it will cost to supply the province with electricity for the next year. All low
volume customers without a contract with an energy retailer are charged the OEB mandated
rate for electricity. If a customer (regardless of volume) has a retailer agreement, then retailer
rates are charged instead. All remaining consumers pay the market price for electricity. The
Corporation is billed for the cost of the electricity that its customers use and passes this cost
on to the customer at cost without a mark-up.
For the distribution revenue included in electricity sales, the Corporation files a "Cost of Service"
("COS") rate application with the OEB every four years where rates are determined through a
review of the forecasted annual amount of operating and capital expenses, debt and
shareholder's equity required to support the Corporation's business. The Corporation
estimates electricity usage and the costs to service each customer class to determine the
appropriate rates to be charged to each customer class. The COS application is reviewed by
the OEB and intervenors and rates are approved based upon this review, including any
revisions resulting from that review.
In the intervening years, an Incentive Rate Mechanism application ("IRM") is filed. An IRM
application results in a formulaic adjustment to distribution rates that were set under the last
COS application. The previous year's rates are adjusted for the annual change in the Gross
Domestic Product Implicit Price Inflator for Final Domestic Demand ("GDP IPI -FDD") net of a
productivity factor and a "stretch factor" determined by the relative efficiency of an electricity
distributor.
As a licensed distributor, the Corporation is responsible for billing customers for electricity
generated by third parties and the related costs of providing electricity service, such as
transmission services and other services provided by third parties. The Corporation is required,
pursuant to regulation, to remit such amounts to these third parties, irrespective of whether the
Corporation ultimately collects these amounts from customers.
The Corporation filed a COS application on April 30, 2019 for rates effective January 1, 2020
to December 31, 2020. The GDP IPI -FDD for 2022 is 3.3%, the Corporation's productivity
factor is 0% and the stretch factor is 0.15%, resulting in a net adjustment of 3.15% to the
previous year's rates.
Page 113 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
2. Basis of presentation (continued):
(f) Investments
Investments in subsidiary companies, associates and other long-term investments are
accounted for by the equity method. Dividends received are recorded as a reduction of the
carrying value of these investments.
3. Significant accounting policies:
The accounting policies set out below have been applied consistently in all periods presented in
these financial statements unless otherwise indicated.
(a) Financial instruments:
At initial recognition, the Company measures its financial assets at fair value plus, in the case
of a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement of the financial asset depends on the classification determined on
initial recognition. Financial assets are classified as either amortized cost, fair value through
other comprehensive income or fair value through profit or loss, depending on its business
model for managing the financial assets and the contractual cash flow characteristics of the
financial assets. Financial assets are not reclassified subsequent to their initial recognition,
unless the Company changes its business model for managing financial assets.
Financial liabilities are initially measured at fair value, net of transaction costs incurred. They
are subsequently carried at amortized cost using the effective interest rate method; any
difference between the proceeds (net of transaction costs) and the redemption value is
recognized as an adjustment to interest expense over the period of the borrowings.
The Corporation has not entered into derivative instruments.
Hedge accounting has not been used in the preparation of these financial statements.
Cash equivalents include short-term investments with maturities of three months or less when
purchased.
(b) Revenue recognition:
Sale and distribution of electricity
The performance obligations for the sale and distribution of electricity are recognized over time
using an output method to measure the satisfaction of the performance obligation. The value
of the electricity services transferred to the customer is determined on the basis of cyclical
meter readings plus estimated customer usage since the last meter reading date to the end of
the period and represents the amount that the Corporation has the right to bill. Revenue
includes the cost of electricity supplied, distribution, and any other regulatory charges. The
related cost of power is recorded on the basis of power used.
Page 114 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(b) Revenue recognition (continued):
For customer billings related to electricity generated by third parties and the related costs of
providing electricity service, such as transmission services and other services provided by third
parties, the Corporation has determined that it is acting as a principal for these electricity
charges and, therefore, has presented electricity revenue on a gross basis.
Capital contributions
Developers are required to contribute towards the capital cost of construction of distribution
assets in order to provide ongoing service. The developer is not a customer and therefore the
contributions are scoped out of I FRS 15 Revenue from Contracts with Customers. Cash
contributions received from developers are recorded as deferred revenue. When an asset
other than cash is received as a capital contribution, the asset is initially recognized at its fair
value, with a corresponding amount recognized as deferred revenue. The deferred revenue,
which represents the Corporation's obligation to continue to provide the customers access to
the supply of electricity, is amortized to income on a straight-line basis over the useful life of
the related asset.
Certain customers are also required to contribute towards the capital cost of construction of
distribution assets in order to provide ongoing service. These contributions fall within the scope
of IFRS 15 Revenue from Contracts with Customers. The contributions are received to obtain
a connection to the distribution system in order to receive ongoing access to electricity. The
Corporation has concluded that the performance obligation is the supply of electricity over the
life of the relationship with the customer which is satisfied over time as the customer receives
and consumes the electricity. Revenue is recognized on a straight-line basis over the useful
life of the related asset.
Other revenue
Revenue earned from the provision of services is recognized as the service is rendered.
Government grants and the related performance incentive payments under CDM programs are
recognized as revenue in the period when there is reasonable assurance that the program
conditions have been satisfied and the payment will be received.
(c) I nventory:
Inventory, comprising material and supplies, the majority of which is consumed by the
Corporation in the provision of its services, is valued at the lower of cost and net realizable
value, with cost being determined on a weighted average cost basis, and includes expenditures
incurred in acquiring the material and supplies and other costs incurred in bringing them to their
existing location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less
estimated selling expenses.
Page 115 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(d) Property, plant and equipment:
Items of property, plant and equipment ("PP&E") used in rate -regulated activities and acquired
prior to January 1, 2015 are measured at deemed cost established on the transition date, less
accumulated depreciation. All other items of PP&E are measured at cost, or, where the item
is transferred from customers, its fair value, less accumulated depreciation. Consistent with
IFRS 1, the Corporation elected to use the carrying amount as previously determined under
Canadian GAAP as the deemed cost at January 1, 2015, the transition date to I FRS.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The
cost of self -constructed assets includes the cost of materials, direct labour, and any other costs
directly attributable to bringing the asset to a working condition for its intended use.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on the disposal of an item of PP&E are determined by comparing the
proceeds from disposal, if any, with the carrying amount of the item of PP&E and are
recognized net within other income in profit or loss.
Major spare parts and standby equipment are recognized as items of PP&E.
The cost of replacing a part of an item of property, plant and equipment is recognized in the
net book value of the item if it is probable that the future economic benefits embodied within
the part will flow to the Corporation and its cost can be measured reliably. In this event, the
replaced part of property, plant and equipment is written off, and the related gain or loss is
included in profit or loss. The costs of the day-to-day servicing of property, plant and equipment
are recognized in profit or loss as incurred.
Depreciation is calculated over the depreciable amount and is recognized in profit or loss on a
straight-line basis over the estimated useful life of each part or component of an item of
property, plant and equipment. The depreciable amount is cost. Land is not depreciated.
Construction -in -progress assets are not amortized until the projects are complete and in
service.
The estimated useful lives are as follows:
Buildings
20-50 years
Transformer station equipment
15-50 years
Distribution station equipment
15-50 years
Distribution system
25-60 years
Meters
15-25 years
SCADA equipment
15 years
Other capital assets
3-10 years
Page 116 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(d) Property, plant and equipment (continued):
Depreciation methods, useful lives, and residual values are reviewed at each reporting date
and adjusted prospectively if appropriate.
(e) Intangible assets
(i) Computer software:
Computer software that is acquired or developed by the Corporation, including software
that is not integral to the functionality of equipment purchased which has finite useful lives,
is measured at cost less accumulated amortization and accumulated impairment losses.
(ii) Land rights:
Payments to obtain rights to access land ("land rights") are classified as intangible assets.
These include payments made for easements, right of access and right of use over land
for which the Corporation does not hold title. Land rights are measured at cost less
accumulated amortization and accumulated impairment losses.
(iii) Amortization:
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill, from the date that they are available
for use. The estimated useful lives are:
Computer software 3-10 years
Land rights 100 years
Amortization methods and useful lives of all intangible assets are reviewed at each
reporting date and adjusted prospectively if appropriate.
(f) Impairment:
(i) Financial assets:
A loss allowance for expected credit losses on financial assets measured at amortized cost
is recognized at the reporting date. The loss allowance is measured at an amount equal
to the lifetime expected credit losses for the asset.
Page 117 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(f) Impairment (continued):
(ii) Non-financial assets:
The carrying amounts of the Corporation's non-financial assets, other than inventories and
deferred tax assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset's recoverable amount
is estimated.
For the purpose of impairment testing, assets are grouped together into the smallest group
of assets that generates cash inflows from continuing use that are largely independent of
the cash inflows of other assets or groups of assets (the "cash -generating unit"). The
recoverable amount of an asset or cash -generating unit is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognized if the carrying amount of an asset or its cash -generating
unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit
or loss.
An impairment loss in respect of goodwill is not reversed. For assets other than goodwill,
impairment recognized in prior periods is assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
(g) Provisions:
A provision is recognized if, as a result of a past event, the Corporation has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
Page 118 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(h) Regulatory deferral accounts:
Regulatory deferral account debit balances represent costs incurred in excess of amounts
billed to the customer at OEB approved rates. These amounts have been accumulated and
deferred in anticipation of their future recovery in electricity distribution rates. Regulatory
deferral account credit balances represent amounts billed to the customer at OEB approved
rates in excess of costs incurred by the Corporation.
Regulatory deferral account debit balances are recognized if it is probable that future billings
in an amount at least equal to the capitalized cost will result from inclusion of that cost in
allowable costs for rate -making purposes. The offsetting amount is recognized in profit and
loss. The debit balance is reduced by the amount of customer billings as electricity is delivered
to the customer and the customer is billed at rates approved by the OEB for the recovery of the
capitalized costs.
Regulatory deferral account credit balances are recognized if it is probable that future billings
in an amount at least equal to the credit balance will be reduced as a result of rate -making
activities. The offsetting amount is recognized in profit and loss. The credit balance is reduced
by the amounts returned to customers as electricity is delivered to the customer at rates
approved by the OEB for the return of the regulatory account credit balance.
The probability of recovery or repayment of the regulatory account balances are assessed
annually based upon the likelihood that the OEB will approve the change in rates to recover or
repay the balance. Any resulting impairment loss is recognized in profit and loss in the period
incurred.
Regulatory deferral accounts attract interest at OEB prescribed rates. With the exception of
the regulatory deferral account for Pension and Other Post -Employment benefits (OPEBs), the
rate for 2022 was 0.57% for January to March, 1.02% for the period April to June and 2.2% for
July and August. Prior year rates from January to December 2021 were 0.57%.
In 2022, the interest rates for the regulatory OPEBs account were 2.72% for the period January
to March, and 3.31 % for the period April to June and 4.66% for July and August. In 2021, the
interest rates for the regulatory OPEBs account were 2.03% for the period January to March,
and 2.29% for the period April to December.
Page 119 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(i) Employee future benefits:
(i) Pension plan:
The Corporation provides a pension plan for all its full-time employees through Ontario
Municipal Employees Retirement System ("OMERS"). OMERS is a multi-employer
pension plan which operates as the Ontario Municipal Employees Retirement Fund ("the
Fund"), and provides pensions for employees of Ontario municipalities, local boards and
public utilities. The Fund is a contributory defined benefit pension plan, which is financed
by equal contributions from participating employers and employees, and by the investment
earnings of the Fund. To the extent that the Fund finds itself in an under -funded position,
additional contribution rates may be assessed to participating employers and members.
OMERS is a defined benefit plan. However, as OMERS does not segregate its pension
asset and liability information by individual employers, there is insufficient information
available to enable the Corporation to directly account for the plan. Consequently, the plan
has been accounted for as a defined contribution plan. Obligations for contributions to
defined contribution pension plans are recognized as an employee benefit expense in net
income when they are due.
(ii) Post -employment benefits, other than pension:
The Corporation provides some of its retired employees with life insurance and medical
benefits beyond those provided by government sponsored plans.
The cost of these benefits is expensed as earned by employees through employment
service. The accrued benefit obligations and the current service costs are actuarially
determined by applying the projected unit credit method and reflect management's best
estimate of certain underlying assumptions. Actuarial gains and losses arising from
defined benefit plans are recognized immediately in other comprehensive income and
reported in retained earnings. When the benefits of a plan are improved, the portion of the
increased benefit relating to past service by employees is recognized in net income on a
straight-line basis over the average period until the benefits become vested. In
circumstances where the benefits vest immediately, the expense is recognized
immediately in net income.
Page 120 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(j) Deferred revenue and assets transferred from customers:
Certain customers and developers are required to contribute towards the capital cost of
construction in order to provide ongoing service. When an asset is received as a capital
contribution, the asset is initially recognized at its fair value, with the corresponding amount
recognized as deferred revenue. Deferred revenue represents the Corporation's obligation to
continue to provide customers access to the supply of electricity and is amortized to income on
a straight-line basis over the economic useful life of the acquired or contributed asset, which
represents the period of ongoing service to the customer.
(k) Leased assets:
At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease.
A contract is, or contains, a lease, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. To assess whether a
contract conveys the right to control the use of an identified asset, the Corporation assess
whether:
(a) The contract involves the use of an identified asset — this may be specified explicitly or
implicitly and should be physically distinct or represent substantially all the capacity of a
physically distinct asset. If the supplier has a substantive substitution right, then the asset
is not identified;
(b) The Corporation has the right to obtain substantially all the economic benefits from the use
of the asset throughout the period of use; and
(c) The Corporation has the right to direct the use of the asset. The Corporation has this right
when it has the decision-making rights that are most relevant to changing how and for what
purpose the asset is used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Corporation has the right to direct the use
of the asset if either the Corporation has the right to operate the asset, or the Corporation
designed the asset in a way that predetermines how and for what purpose it will be used.
The Corporation recognizes a right -of -use asset and a lease liability at the lease
commencement date. The right -of -use asset is initially measured at cost, which comprises the
initial amount of the lease liability, adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle
and remove the underlying asset or the site on which it is locate, less any lease incentives
received.
The right -of -use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right -of -use asset or the
end of the lease term. The estimated useful life of a right -of -use asset is determined on the
same basis as those for property, plant and equipment. In addition, the right -of -use asset is
periodically reduced by impairment losses, if any, and adjusted for certain re -measurements of
the lease liability.
Page 121 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
3. Significant accounting policies (continued):
(1) Finance income and finance costs:
Finance income is recognized as it accrues in profit or loss, using the effective interest method.
Finance income comprises interest earned on cash and cash equivalents and on regulatory
assets.
Finance charges comprise interest expense on borrowings, finance lease obligations,
regulatory liabilities and unwinding of the discount on provisions and impairment losses on
financial assets. Finance costs are recognized as an expense unless they are capitalized as
part of the cost of qualifying assets.
(m) Income taxes:
The income tax expense comprises current and deferred tax. Income tax expense is
recognized in profit or loss except to the extent that it relates to items recognized directly in
equity, in which case, it is recognized in equity.
The Corporation is currently exempt from taxes under the Income Tax Act (Canada) and the
Ontario Corporations Tax Act (collectively the "Tax Acts"). Under the Electricity Act, 1998, the
Corporation makes payments in lieu of corporate taxes to the Ontario Electricity Financial
Corporation ("OEFC"). These payments are calculated in accordance with the rules for
computing taxable income and taxable capital and other relevant amounts contained in the
Income Tax Act (Canada) and the Corporations Tax Act (Ontario) as modified by the Electricity
Act, 1998, and related regulations. Prior to October 1, 2001, the Corporation was not subject
to income or capital taxes. Payments in lieu of taxes are referred to as income taxes.
Current tax is the tax payable on the taxable income for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognized using the balance sheet method. Under this method, deferred
income taxes reflect the net tax effects of temporary differences between the tax basis of assets
and liabilities and their carrying amounts for accounting purposes, as well as for tax losses
available to be carried forward to future years that are likely to be realized. Deferred tax assets
and liabilities are measured using enacted or substantively enacted tax rates, at the reporting
date, expected to apply to taxable income in the periods in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date of enactment
or substantive enactment.
Page 122 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
4. Cash:
2022 2021
Cash $ - $ 61079
5. Accounts receivable:
2022 2021
Customer and other trade receivables $ 20,467 $ 217027
Trade receivables from related parties 220 260
$ 207687 $ 217287
6. Inventory:
The amount of inventories consumed by the Corporation and recognized as an expense during
2022 was $321 (2021 - $373).
7. Property, plant and equipment:
(a) Cost or deemed cost:
Page 123 of 264
Land and
Distribution
Other fixed
Construction- Right -of -use
buildings
equipment
assets
in -progress
assets
Total
Balance at January 1, 2022
$ 28,440
$ 300,102
$ 71436
$ 2754
$ 601
$ 3395333
Additions
128
23240
310
13,299
-
15,977
Transfers
7
11,345
342
(11, 694)
-
-
Disposals/Retirements
-
-
(277)
-
-
(277)
Balance at August 31, 2022
$ 28,575
$ 313,687
$ 7,811
$ 4,359
$ 601
$ 355,033
Land and
Distribution
Other fixed
Construction- Right -of -use
buildings
equipment
assets
in -progress
assets
Total
Balance at January 1, 2021
$ 26,433
$ 277,793
$ 91992
$ 5, 837
$ -
$ 320,055
Additions
1,380
2,316
1,099
17,849
601
23,245
Transfers
692
19,982
28
(20, 702)
-
-
Disposals/Retirements
(65)
11
(3,683)
(230)
-
(3,967)
Balance at December 31, 2021
$ 28,440
$ 300,102
$ 77436
$ 27754
$ 601
$ 3397333
Page 123 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
7. Property, plant and equipment (continued):
(b) Accumulated depreciation:
Land and
Distribution
Other fixed
Construction- Right -of -use
buildings
equipment
assets
in -progress assets
Total
Balance at January 1, 2022
$ 4,122
$ 54,850
$ 897
$ - $ 20
$ 59,889
Depreciation charge
513
61167
942
- 20
75642
Disposals/Retirements
-
-
(276)
- -
(276)
Balance at August 31, 2022
$ 4,635
$ 61,017
$ 1,563
$ - $ 40
$ 675255
Land and
Distribution
Other fixed
Construction- Right -of -use
buildings
equipment
assets
in -progress assets
Total
Balance at January 1, 2021
$ 3,429
$ 46,021
$ 3,024
$ - $ -
$ 521474
Depreciation charge
758
81818
15467
- 20
11,063
Disposals/Retirements
(65)
11
(3,594)
- -
(3,648)
Balance at December 31, 2021
$ 4,122
$ 54,850
$ 897
$ - $ 20
$ 59,889
(c) Carrying amounts:
Land and
Distribution
Other fixed
Construction- Right -of -use
buildings
equipment
assets
in -progress assets
Total
At August 31, 2022
$ 23,940
$ 252,670
$ 6,248
$ 4,359 $ 561
$ 2875778
At December 31, 2021
$ 24,318
$ 245,252
$ 6,539
$ 27754 $ 581
$ 279,444
(d) Leased plant and equipment:
In May 2021, the Corporation entered into a lease agreement with Grand River Energy
Solutions Corp., an associated company, for the construction and lease of solar PV roof -top
equipment located at the Corporation's registered office. A right -of -use asset and
corresponding lease liability of $601 were recorded.
(e) Security:
At August 31, 2022, the Corporation had zero properties subject to a general security
agreement.
(f) Borrowing costs:
During the period, borrowing costs of $ nil (2021 - $ nil) were capitalized as part of the cost of
property, plant and equipment.
Page 124 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
7. Property, plant and equipment (continued):
(g) Allocation of depreciation and amortization:
The depreciation of property, plant and equipment
and the amortization
of intangible assets
has been allocated to profit or loss as follows:
Operations and Customer
General and
Energy
maintenance services
administration
Conservation
expense expense
expense
expense Other
Total
August 31, 2022:
Depreciation of property, plant and equipment $ 503 $ 4
$ 2
$
- $ 7,133
$ 7,642
Amortization of intangible assets - -
-
- 868
868
$ 503 $ 4
$ 2
$
- $ 8,001
$ 8,510
December 31, 2021:
Depreciation of property, plant and equipment $ 702 $ 9
$ -
$
2 $ 10,350
$ 11,063
Amortization of intangible assets - -
-
- 627
627
$ 702 $ 9
$ -
$
2 $ 10,977
$ 11,690
8. Intangible assets:
(a) Cost or deemed cost:
Computer
Software
Land Rights
Total
Balance at January 1, 2022 $
115838
$
8 $
11,846
Additions
239
-
239
Disposals
(15)
-
(15)
Balance at August 31, 2022 $
125062
$
8 $
127070
Balance at January 1, 2021 $
10,938
$
8 $
107946
Additions
3,733
-
37733
Disposals
(2, 833)
-
(2, 833)
Balance at December 31, 2021 $
115838
$
8 $
117846
Included within Computer Software is $272 (2021 - $250) of intangible assets under development.
Page 125 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
8. Intangible assets (continued):
(b) Accumulated amortization:
Computer
Software
Land Rights
Total
Balance at January 1, 2022
$
653
$ 8
$
661
Additions
868
-
868
Disposals
(15)
-
(15)
Balance at August 31, 2022
$
11506
$ 8
$
1, 514
Balance at January 1, 2021
$
21859
$ 8
$
21867
Additions
627
-
627
Disposals
(2) 833)
-
(2) 833)
Balance at December 31, 2021
$
653
$ 8
$
661
(c) Carrying amounts:
Computer
Software
Land Rights
Total
At August 31, 2022
$
10, 556
$ -
$
10, 556
At December 31, 2021
$
111185
$ -
$
11,185
Page 126 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
9. Income tax expense:
Current tax expense:
2022
2021
Current period
$
95
$
291
Adjustment for prior periods
(42)
(700)
$
53
$
(409)
Deferred tax expense:
2022
2021
Original & reversal of temporary differences
$
(76)
$
(20)
Recognition of previously unrecognized tax losses
(12)
(91)
$
(88)
$
(111)
Reconciliation of effective tax rate:
2022
2021
Total comprehensive income for the period
$
65836
$
119195
Total income tax expense
(35)
(520)
Comprehensive income before income taxes
65801
105675
Income tax using the Corporation's statutory tax rate of 26.5%
1, 802
2, 829
Temporary differences not benefitted
(1)794)
(2,649)
Under (over) provided in prior periods
(43)
(700)
$
(35)
$
(520)
Significant components of the Corporation's deferred tax balances are as follows:
2022
2021
Deferred tax assets (liabilities):
Property, plant and equipment
$
(23, 880)
$
(22, 536)
Non -vested sick leave
182
168
Employee future benefits
15608
15593
Intangible assets
11
7
Loss carry -forward
307
295
Ontario refundable tax credits
48
6
Deferred revenue - contributed capital
125561
12, 094
$
(95163)
$
(8, 373)
Page 127 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
10. Regulatory deferral account balance
The following is a reconciliation of the carrying
amount for each class of regulatory
deferral account
balances:
Balances
Remaining
arising in the
Recovery/
recovery/ reversal
2021
period
Reversal Other
2022
period (years)
Regulatory deferral account debit balances
Group 1 deferred accounts $ 9,430
$ 52461
$ (3,985) $ 25
$
101931
Note 1, Note 3
Regulatory asset recovery account 822
(1,579)
4,060 -
3,303
Note 1
Deferred tax asset 14,201
1,198
- -
15,399
Note 2
LRAM 874
-
(874) -
-
1 Year
Other 69
66
- -
135
1 Year
Total amount related to regulatory
deferral account debit balances $ 25,396
$ 5,146
$ (799) $ 25
$
29,768
Balances
Remaining
arising in the
Recovery/
recovery/ reversal
2021
period
Reversal Other
2022
period (years)
Regulatory deferral account credit balances
Group 1 deferred accounts $ 220
$ 680
$ 1,942 $ 26
$
2,868
Note 1
Other 559
3
- -
562
3 Year
Total amount related to regulatory
deferral account credit balances $ 779
$ 683
$ 11942 $ 26
$
31430
2022
2021
Movements in regulatory accounts
Net change in regulatory deferral account
debit and credit balances
$
1,722
$ 7,232
Less movement related to the balance sheet
Deferred income tax
(1,198)
(5,826)
Deferred revenue
533
802
Net movement in regulatory deferral account balances related to profit or loss and the
related deferral tax movement
$
17057
$ 27208
Note 1 KWHI has been approved for collection of these amounts in its 2021 filing for 2022
rates.
Page 128 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
10. Regulatory deferral account balance (continued):
Note 2 KWHI has not sought approval for the disposition of this amount as changes in
underlying assumptions may reduce the amounts recorded in the account. KWHI may
seek refunds in the future
Note 3 In December 2020, KWHI was informed that beginning June 2015 charges were not
included in the monthly power bill for one delivery point for Transmission Network
Charges. KWHI accrued a payable of $6 million in 2020, offset by a regulatory asset.
These monies were collected through an OEB approved rate rider through August
2022.
11. Long-term debt:
Effective August 1, 2000, the Corporation incurred unsecured promissory notes payable to the City
of Kitchener and the Township of Wilmot and have an interest rate of 3.23% per annum. Interest is
payable in quarterly installments, in arrears, on March 31St, June 30th, September 30th and
December 31 St
2022 2021
Senior unsecured debentures:
City of Kitchener $ 70,998 $ 707998
Township of Wilmot 57965 57965
Senior unsecured debentures, net proceeds $ 767963 $ 767963
Less: current portion of long-term debt $ - $ -
Total long-term debt $ 76, 963 $ 76, 963
12. Employee future benefits:
The Corporation pays certain medical and life insurance benefits on behalf of some of its retired
employees. The Corporation recognizes these post-retirement costs in the period in which
employees' services were rendered. The accrued benefit liability at August 31, 2022 of $6,068 was
based on an actuarial valuation completed in 2020 using a discount rate of 3.1% (3.1 % in 2021).
Page 129 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
12. Employee future benefits (continued):
Changes in the present value of the defined benefit unfunded obligation and the accrued benefit
liability:
2022 2021
Defined benefit obligation, beginning of period $ 67012 $ 57937
Current service cost 136 191
Interest cost 131 180
Benefits paid during the period (211) (296)
Actuarial loss recognized in other - -
comprehensive income
Accrued benefit liability, end of period $ 67068 $ 67012
Components of net benefit expense recognized are as follows:
Page 130 of 264
2022
2021
Current service cost
Interest cost
$ 136 $
131
191
180
Net benefit expense recognized
$ 267 $
371
Actuarial losses recognized in other comprehensive income:
2022
2021
Cumulative amount at January 1
Recognized during the period (net of tax)
$ (620) $
-
(620)
-
Cumulative amount at the end of period
$ (620) $
(620)
Page 130 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
12. Employee future benefits (continued):
The significant actuarial assumptions used in the valuation are as follows (weighted average):
Page 131 of 264
2022
2021
Accrued benefit obligation:
Discount rate
3.1%
3.1%
Benefit cost for the period:
Age
Withdrawal rate
18-29
3.50%
3.50%
30-34
2.00%
2.00%
35-39
1.7%
1.7%
40-49
1.3%
1.3%
50-54
1.0%
1.0%
Assumed health care cost trend rates:
Initial health care cost trend rate
Health
4.9%
4.7%
Dental
5.1%
4.9%
The approximate effect on the accrued benefit obligation of the entire plan and the estimated net
benefit expense of the entire plan if the health care trend rate assumption was
increased or
decreased by 1 %, and all other assumptions were held constant,
is as follows:
Benefit
Periodic
Obligation Benefit Cost
1 % increase in health care trend rate
$ 219 $
27
1 % decrease in health care trend rate
$ (197) $
(15)
Page 131 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
12. Employee future benefits (continued):
The main actuarial assumptions utilized for the valuation are as follows:
General inflation - future general inflation levels, as measured by the changes in the Consumer
Price Index, were assumed at 2% in 2022, and thereafter (2021 - 2%).
Discount (interest) rate - the discount rate used to determine the present value of future liabilities
and the expense for the period ended August 31, 2022, was 3.1% (2021 — 3.1 %).
Salary levels - future general salary and wage levels were assumed to increase at 3.3% (2021 -
3.3%) per annum.
Medical costs - medical costs were assumed to be 4.7% for 2022 (4.4% for 2021).
Dental costs - dental costs were assumed to be 4.9% for 2022 (4.7% for 2021).
13. Customer and IESO deposits:
Customer deposits represent cash deposits from electricity distribution customers and retailers, as
well as construction deposits.
Deposits from electricity distribution customers are refundable to customers who demonstrate an
acceptable level of credit risk as determined by the Corporation in accordance with policies set out
by the OEB or upon termination of their electricity distribution service.
Construction deposits represent cash prepayments for the estimated cost of capital projects
recoverable from customers and developers. Upon completion of the capital project, these deposits
are transferred to deferred revenue.
The Corporation delivers conservation and demand management programs for its customers on
behalf of the I ESO. Prepayments received from the I ESO have been recorded and will be
transferred to revenue as programs are delivered and the revenue is earned.
The deposits comprise:
2022 2021
Customer deposits $ 57530 $ 57623
Construction deposits 97442 77424
ESO deposit for energy conservation programs 1,158 17158
Total customer deposits $ 16,130 $ 147205
Page 132 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
14. Share capital:
2022 2021
Authorized:
Unlimited number of common shares
ssued:
20,000 common shares $ 667389 $ 667389
Dividends:
The holders of the common shares are entitled to receive dividends as declared from time to time.
The Corporation paid aggregate dividends in the period common shares of $4,570 (2021 - $43386).
A further $2,400 was declared but not paid.
15. Other operating revenue:
Other income comprises:
Page 133 of 264
2022
2021
Specific service charges
$ 11074 $
17748
Deferred revenue
826
1,140
Scrap sales
206
187
Net gain on disposal of capital assets
56
51
Non -Utility operation
17
4
Retailer services
27
39
Sundry
42
150
Total other income
$ 23248 $
31319
16. Finance income and expense:
2022
2021
Interest income on bank deposits
$ 41 $
39
Finance income
41
39
Interest expense on long-term debt
13658
21472
Interest expense (recovery) on short-term debt
41
(256)
Interest expense on BMO Letter of Credit
81
123
Interest expense on deposits
40
35
Interest expense on capital lease
24
24
Other
-
111
11844
2, 509
Net finance costs recognized in profit or loss
$ 13803 $
2,470
Page 133 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
17. Lease Liabilities:
The Corporation has entered into a lease agreement for solar PV roof -top equipment representing right -
of -use assets (note 7). The right -of -use assets are recognized at the present value of the minimum
lease payments, plus any extensions estimated to be exercised, with the corresponding equivalent
lease liability recognized. The Corporation has determined the lease terms based on all available
information as at the reporting date.
August 31, December 31,
Maturity Analysis - contractual undiscounted cash flows 2022 2021
Less than one year $ 42 $ 42
one - five years 233 228
More than five years 766 799
Total undiscounted lease liabilities at period end $ 1,041 $ 11069
Interest included on the liabilities included in the statement of financial
position at August 31, 2022 $ (447) $ (471)
Lease Liabilities - current 42 42
Lease Liabilties - non-current $ 552 $ 556
18. Commitments and contingencies:
Contractual Obligations
KWHI entered into a lease agreement with Grand River Energy Solutions Corp for a rooftop solar
PV system (see note 17 for details).
General
From time to time, the Corporation is involved in various litigation matters arising in the ordinary
course of its business. The Corporation has no reason to believe that the disposition of any such
current matter could reasonably be expected to have a materially adverse impact on the
Corporation's financial position, results of operations or its ability to carry on any of its business
activities.
General Liability Insurance:
The Corporation is a member of the Municipal Electric Association Reciprocal Insurance Exchange
(MEARIE). MEARIE is a pooling of public liability insurance risks of many of the LDCs in Ontario.
All members of the pool are subjected to assessment for losses experienced by the pool for the
years in which they were members, on a pro -rata basis based on the total of their respective service
revenues. As at August 31, 2022, no assessments have been made.
Page 134 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
19. Guarantees:
Kitchener Power Corp. is the guarantor for a line of credit issued by the Canadian Imperial Bank of
Commerce on behalf of Grand River Energy Solutions Corp. (GRE Corp). GRE Corp. is one third
owned by each of Kitchener Power Corp., Waterloo North Hydro Holding Corporation and
Grandbridge Corporation.; each of which has guaranteed a maximum of $6 million in the event of
default by GRE Corp.
20. Pension agreement:
The Corporation provides a pension plan for its employees through OMERS. The plan is a multi-
employer, contributory defined pension plan with equal contributions by the employer and its
employees. In 2022, the Corporation made employer contributions of $1,118 to OMERS (2021 -
$1,681). The Corporation's net benefit expense has been allocated as follows:
(a) $294 (2021 - $439) capitalized as part of property, plant and equipment;
(b) $824 (2021 - $1,242) charged to net income.
The Corporation estimates that a contribution of $nil to OMERS will be made during the next fiscal
year.
21. Employee benefits:
2022 2021
Salaries, wages and benefits $ 137484 $ 197657
CPP and EI remittances 756 782
Contributions to OMERS 11118 17681
Expenses related to employee future benefit plans 267 371
$ 159625 $ 227491
22. Related party transactions:
(a) Parent and ultimate controlling party:
The Corporation is wholly-owned by the Corporation of the City of Kitchener and the
Corporation of the Township of Wilmot. The City and the Township produce financial
statements that are available for public use.
(b) Entity with significant influence:
The Corporation of the City of Kitchener exercises significant influence over the Corporation
through its 92.25% ownership interest in the Corporation.
Page 135 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
22. Related party transactions(continued):
(c) Key management personnel:
The key management personnel of the Corporation have been defined as members of its board
of directors and executive management team members and is summarized below.
2022 2021
Directors' fees $ 48 $ 93
Salaries and other short-term benefits 898 11106
Employe future benefits 17 20
Other long-term benefits (OMERS) 71 91
$ 11034 $ 17310
(d) Transactions with parent:
During the year the Corporation paid management and business development services to its
parent in the amount of $ nil (2021 - $ nil)
(e) Transactions with entity with significant influence:
In the ordinary course of business, the Corporation delivers electricity to the Corporation of the
City of Kitchener. Electricity is billed to the City of Kitchener at prices and under terms approved
by the OEB.
(f) Transactions with ultimate parent (the City of Kitchener)
In 2022, the Corporation had the following significant transactions with its ultimate parent, a
government entity:
• Construction, contracted through Kitchener Wilmot Hydro Inc.
• Streetlight maintenance services contracted through Kitchener Energy Services Inc.
23. Financial instruments and risk management:
Fair value disclosure
Cash and cash equivalents are measured at fair value. The carrying values of receivables, and
accounts payable and accrued charges approximate fair value because of the short maturity of
these instruments. The carrying value of the customer deposits approximates fair value because
the amounts are payable on demand.
The fair value of the long term debt (senior unsecured debentures issued by the shareholders (City
of Kitchener and Township of Wilmot) approximates the carrying value due to the short term nature
of the loan.
Financial risks
The Corporation understands the risks inherent in its business and defines them broadly as
anything that could impact its ability to achieve its strategic objectives. The Corporation's exposure
Page 136 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
23. Financial instruments and risk management (continued):
to a variety of risks such as credit risk, interest rate risk, and liquidity risk, as well as related
mitigation strategies are discussed below.
(a) Credit risk:
Financial assets carry credit risk that a counterparty will fail to discharge an obligation which
could result in a financial loss. Financial assets held by the Corporation, such as accounts
receivable, expose it to credit risk. The Corporation earns its revenue from a broad base of
customers located in the City of Kitchener and the Township of Wilmot. As of August 31, 2022,
no customers accounted for more than 1 % of total accounts receivable, $20,687.
The carrying amount of accounts receivable is reduced through the use of an allowance for
impairment and the amount of the related impairment loss is recognized in net income.
Subsequent recoveries of receivables previously provisioned are credited to net income. The
balance of the allowance for impairment at August 31, 2022 is $500 (2021 - $250). An
impairment loss of $257 (2021 gain of $127) was recognized during the year. This is due to
an increase of the allowance for bad debt to $500 from $250.
The Corporation's credit risk associated with accounts receivable is primarily related to
payments from distribution customers. At August 31, 2022, approximately $1,069 (2021 -
$112) is considered 60 days past due. The Corporation has over 100 thousand customers, the
majority of whom are residential. Credit risk is managed through collection of security deposits
from customers in accordance with directions provided by the OEB. As at August 31, 2022,
the Corporation holds security deposits in the amount of $5,530 (December 31, 2021 - $5,623).
(b) Market risk:
Market risks primarily refer to the risk of loss resulting from changes in commodity prices,
foreign exchange rates, and interest rates. The Corporation currently does not have any
material commodity or foreign exchange risk. The Corporation is exposed to fluctuations in
interest rates as the regulated rate of return for the Corporation's distribution business is
derived using a complex formulaic approach which is in part based on the forecast for long-
term Government of Canada bond yields. This rate of return is approved by the OEB as part
of the approval of distribution rates.
The Corporation does not hold any long-term debt that is subject to market rates. Consequently
a 1 % increase or decrease in the interest rate at August 31, 2022 would have no financial
impact.
(c) Liquidity risk:
The Corporation monitors its liquidity risk to ensure access to sufficient funds to meet
operational and investing requirements. The Corporation's objective is to ensure that sufficient
liquidity is on hand to meet obligations as they fall due while minimizing interest exposure. The
Corporation has access to a $35,000 credit facility and monitors cash balances daily to ensure
Page 137 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
23. Financial instruments and risk management (continued):
(c) Liquidity risk (continued):
that a sufficient level of liquidity is on hand to meet financial commitments as they come due.
As at August 31, 2022, $3,564 had been drawn under Bank of Montreal credit facility (2021 - $
nil).
The Corporation also has a bilateral facility for $35,000 (the "LC" facility) for the purpose of
issuing letters of credit mainly to support the prudential requirements of the IESO, of which
$35,000 has been drawn and posted with the IESO (2021 - $35,000). The majority of accounts
payable, as reported on the balance sheet, are due within 30 days.
(d) Capital disclosures:
The main objectives of the Corporation, when managing capital, are to ensure ongoing access
to funding to maintain and improve the electricity distribution system, compliance with
covenants related to its credit facilities, prudent management of its capital structure with regard
for recoveries of financing charges permitted by the OEB on its regulated electricity distribution
business, and to deliver the appropriate financial returns.
The Corporation's definition of capital includes shareholder's equity and long-term debt. As at
August 31, 2022, shareholder's equity amounts to $173,896 (2021 - $174,030) and long-term
debt amounts to $76,963 (2021 - $767963).
24. Revenue from Contracts with Customers
The Corporation generates revenue primarily from the sale and distribution of electricity to its
customers. Other sources of revenue include performance incentive payments under CDM
programs.
2022 2021
Revenue from Contracts with Customers $ 180,534 $ 2527110
Other Revenue:
CDM programs 591 17262
Other 11513 21011
Total $ 182,638 $ 255,383
Page 138 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
24. Revenue from Contracts with Customers (continued):
In the following table, revenue from contracts with customers is disaggregated by type of
customer.
25. Change in Accounting Policy
The International Accounting Standards Board (IASB) has issued the following Standards,
Interpretations and Amendments to Standards that were adopted by the Corporation effective
January 1, 2022:
(a) Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
(b) Onerous Contracts — Costs of Fulfilling a Contract (Amendments to IAS 37)
(c) Annual Improvements to IFRS Standards 2018-2020
(d) Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments and clarifications did not have an impact on the financial statements.
26. Future accounting pronouncements:
At the date of authorization of these financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and Interpretations have been published by
the IASB. None of these Standards or amendments to existing Standards have been adopted
early by the Company and it is still to be determined if any will have a material impact on the
Company's financial statements.
(a) Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
On February 12, 2021, the IASB issued amendments to IAS 1 Presentation of Financial
Statements and an update to IFRS Practice Statement 2 Making Materiality Judgements to
help companies provide useful accounting policy disclosures. The key amendments to IAS 1
include a requirement for companies to disclose their material accounting policies rather than
their significant accounting policies; clarifying that accounting policies related to immaterial
transactions, other events or conditions are themselves immaterial and as such need not be
disclosed; and clarifying that not all accounting policies that relate to material transactions,
other events or conditions are themselves material to a company's financial statements. The
amendments are effective for annual periods beginning on or after January 1, 2023. Early
adoption is permitted.
Page 139 of 264
2022
2021
Residential
$ 785936 $
1115252
Commercial
995161
1375661
Large Users
15323
15565
Other
11114
13632
Total Revenue
$ 1805534 $
2525110
25. Change in Accounting Policy
The International Accounting Standards Board (IASB) has issued the following Standards,
Interpretations and Amendments to Standards that were adopted by the Corporation effective
January 1, 2022:
(a) Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
(b) Onerous Contracts — Costs of Fulfilling a Contract (Amendments to IAS 37)
(c) Annual Improvements to IFRS Standards 2018-2020
(d) Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments and clarifications did not have an impact on the financial statements.
26. Future accounting pronouncements:
At the date of authorization of these financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and Interpretations have been published by
the IASB. None of these Standards or amendments to existing Standards have been adopted
early by the Company and it is still to be determined if any will have a material impact on the
Company's financial statements.
(a) Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
On February 12, 2021, the IASB issued amendments to IAS 1 Presentation of Financial
Statements and an update to IFRS Practice Statement 2 Making Materiality Judgements to
help companies provide useful accounting policy disclosures. The key amendments to IAS 1
include a requirement for companies to disclose their material accounting policies rather than
their significant accounting policies; clarifying that accounting policies related to immaterial
transactions, other events or conditions are themselves immaterial and as such need not be
disclosed; and clarifying that not all accounting policies that relate to material transactions,
other events or conditions are themselves material to a company's financial statements. The
amendments are effective for annual periods beginning on or after January 1, 2023. Early
adoption is permitted.
Page 139 of 264
KITCHENER POWER CORP. - CONSOLIDATED
Notes to Financial Statements
For the period January 1, 2022 to August 31, 2022, with comparative information for the year ended
December 31, 2021
(Expressed in thousands of dollars)
26. Future accounting pronouncements (continued):
(b) Definition of Accounting Estimate (Amendments to IAS 8)
On February 12, 2021, the IASB issued Definition of Accounting Estimates (Amendments to
IAS8). The amendments introduce a new definition for accounting estimates, clarifying that
they are monetary amounts in the financial statements that are subject to measurement
uncertainty. The amendments also clarify the relationship between accounting policies and
accounting estimates by specifying that a company develops an accounting estimate to
achieve the objective set out by an accounting policy. The amendments are effective for annual
periods beginning on or after January 1, 2023. Early adoption is permitted.
(C) Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction -
Amendments to IAS 12 Income Taxes.
On May 7, 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12). The amendments narrow the scope of the initial
recognition exemption so that it does not apply to transactions that give rise to equal and
offsetting temporary differences. As a result, companies will need to recognize a deferred tax
asset and a deferred tax liability for temporary differences arising on initial recognition of a
lease and a decommissioning provision. The amendments are effective for annual periods
beginning on or after January 1, 2023. Earlier adoption is permitted.
Page 140 of 264
llfl
V -1 Aff, IAL 1
KPMG LLP
120 Victoria Street South
Suite 600
Kitchener ON N2G OE1
Canada
Tel 519-747-8800
Fax 519-747-8811
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of Enova Energy Corporation
Opinion
We have audited the consolidated financial statements of Enova Energy Corporation (the
Entity), which comprise:
• the consolidated statement of financial position as at December 31, 2022
• the consolidated statement of comprehensive income for the period September 1, 2022
to December 31, 2022
• the consolidated statement of changes in equity for the period September 1, 2022 to
December 31, 2022
• the consolidated statement of cash flows for the period September 1, 2022 to December
3132022
• and notes to the consolidated 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 material respects,
the consolidated financial position of the Entity as at December 31, 2022, and its
consolidated financial performance and its consolidated cash flows for the period September
17 2022 to December 31, 2022 in accordance with International Financial Reporting
Standards (I FRS).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing
standards. Our responsibilities under those standards are further described in the
"Auditor's Responsibilities for the Audit of the Financial Statements" section of our
auditor's report.
We are independent of the Entity in accordance with the ethical requirements that are
relevant to our audit of the financial statements in Canada and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
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�. ��. q " �. rM ii SII "V il.,'.,� a . ""� •� . ..1 it w r 'ii +���.. il..h p il,.,.� �W r 9 i,. i'"'�h".. "��„"�
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�� IIN, n�11 n� �: � iin ad :i IIp o lm � Ie s �� u���di c� to IIIA RIS n III....
Page 141 of 264
V -Al A' A,2W A
Page 2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
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 International Financial Reporting Standards (IFRS), and for
such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for
assessing the Entity'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 either intends to liquidate the Entity or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Entity's financial
reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will 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 of the consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the consolidated 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.
Page 142 of 264
The risk of not detecting omaterial misstatement resulting from fraud ishigher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override ofinternal control.
m Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumetanues, but not for the purpose of
expressing anopinion onthe effectiveness ofthe Entity's internal control.
m Evaluate the appropriateness ofaccounting policies used and the reasonableness of
accounting estimates and related disclosures made bvmanagement.
m Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence ob1ained, whether material uncertainty
exists related toevents orconditions that may cast significant doubt unthe Entity'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 Entity to cease to continue
aeagoing concern.
m Evaluate the overall presentotion, structure and content of the Dnonoio| obs±emenba,
including the disclosures, and whether the financial statements represent the underlying
transactions and events inamanner that achieves fair presentation.
m Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit Undinge, including any
significant deficiencies in internal control that we identify during our audit.
m Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group Entity to express an opinion on the
financial statements. VVe are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
awz:� 14P
Chartered Professional Accountants, Licensed Public Accountants
Kitchener, Canada
Page 143 of 264
ENOVA ENERGY CORPORATION
Consolidated Statement of Financial Position
As at December 31, 2022
(Expressed in thousands of dollars)
December 31,
Note 2022
ASSETS
Current
Cash $ 151189
Accounts receivable 5 345660
Unbilled revenue 33,366
1 nventori es 73655
Prepaid expenses 21371
Current portion of lease receivables 111
Total current assets $ 93,352
Non-current assets
Derivative asset
Property, plant and equipment
ntangible assets
Goodwill
Long term portion of lease receivables
Deferred tax asset
Investments in subsidiaries
YA
6 570,164
7 181571
3 1401077
11255
528
322
Total non-current assets $ 731,509
Total assets 824,861
Regulatory deferral account debit balances 9 511872
Total assets and regulatory deferral account debit balances $ 876,733
Page 144 of 264
ENOVA ENERGY CORPORATION
Consolidated Statement of Financial Position
As at December 31, 2022
(Expressed in thousands of dollars)
Note December 31,
2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities
$ 495918
Current portion of lease liabilities 17
97
Income tax payable
11685
Current portion of deferred revenue
23214
Dividends payable 14
51056
Current portion of customer deposits 13
12,081
Total current liabilities
$ 71,051
Long-term
Long-term debt
10
117,598
Notes payable to shareholder
11
110, 254
Long term portion of customer deposits
13
81634
Long term portion of lease liabilities
17
778
Deferred revenue
793177
Employee future benefits
12
73703
Deferred tax liability
8
23,517
Total long-term liabilities
$ 347,661
Total liabilities
418,712
Shareholders' equity
Share capital 14 326,248
Retained earnings 1141465
Accumulated other comprehensive income (loss) 12 11591
Non -controlling interest 13000
Total shareholders' equity $ 4433304
Total liabilities and shareholders' equity $ 862,016
Regulatory deferral account credit balances 9 67072
Deferred taxes associated with regulatory accounts 9 87645
Total equity, liabilities and regulatory deferral account credit balances $ 8765733
The accompanying notes are an integral part of these financial statements.
On behalf of the Board:
Rosa Lupo, Chair
Tim Martin, Vice -Chair
Page 145 of 264
ENOVA ENERGY CORPORATION
Consolidated Statement of Comprehensive Income
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
Note 2022
REVENUES
Energy sales 15 $ 1145666
Cost of energy sold 1177918
(3,252)
Other operating revenue
Distribution revenue 15 305483
Other income 15 25554
Net operating revenue $ 2%785
EXPENSES
Operations and maintenance
65693
Customer services
3,057
Administration
45106
Amortization 6
73804
215660
Other
Energy conservation program revenue
(21791)
Energy conservation program expense
27801
Net energy conservation programs
10
Finance income 16 (183)
Finance charges 16 31085
Unrealized gain on derivative (953)
Net finance costs 1,949
Income before income taxes $ 69166
Income tax expense 8 11195
Income for the period before movements in
regulatory deferral account balances and OCI $ 4,971
Net movement in regulatory deferral account balances
related to profit or loss and the related deferred tax
movement 9 11518
Other comprehensive income, net of taxes 12 25211
Non -controlling interest (151)
Net comprehensive income for the period $ 89549
The accompanying notes are an integral part of these financial statements.
Page 146 of 264
ENOVA ENERGY CORPORATION
Consolidated Statement of Changes in Equity
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
Balance at December 31, 2022 $ 326,248 $ 11000 $ 11591 $ 114,465 $ 4433304
The accompanying notes are an integral part of these financial statements.
Page 147 of 264
Accumulated
Non-
Other
Share
Controlling
Comprehensive
Retained
Note Capital
Interest
Income (loss)
Earnings
Total
Balance at September 1, 2022
$ 66,389
$ -
$ (620)
$ 108,127
$ 173,896
Shares issued related to
acquisition
3 259,859
849
-
-
2609708
Net income and net movement in
regulatory balances
-
-
27211
61338
89549
Non -controlling interest
151
151
Balance at December 31, 2022 $ 326,248 $ 11000 $ 11591 $ 114,465 $ 4433304
The accompanying notes are an integral part of these financial statements.
Page 147 of 264
ENOVA ENERGY CORPORATION
Consolidated Statement of Cash Flows
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
Note 2022
OPERATING ACTIVITIES
Net income
$ 81549
Add (deduct) charges to operations not requiring a current
(1, 882)
cash payment:
110,000
Amortization 6
81456
Amortization of deferred revenue
(730)
Gain on disposal of property, plant and equipment 15
(37)
Income tax expense 8
11195
Interest expense on lease liabilities
12
ncome taxes paid
(440)
Change in non -controlling interest
151
Decrease in employee future benefits liability 12
(21933)
Unrealized gain on derivatives
(953)
Recognition of unrealized gain on derivatives
(287)
12,983
Net change in non-cash operating working capital
Accounts receivable
61522
Unbilled revenue
31123
1 nventories
13460
Prepaid expenses
(601)
Deferred tax asset
604
Accounts payable and accrued liabilities
(41794)
Deferred tax liability
(364)
Regulatory deferral account debit balances
21451
Regulatory deferral account credit balances
(2, 894)
Cash provided by operating activities
$ 18,490
INVESTING ACTIVITIES
Purchase of property, plant and equipment 6 (18,562)
Purchase of intangible assets 7 (146)
Proceeds on disposal of property, plant and equipment 37
Cash used in investing activities $ (185671)
FINANCING ACTIVITIES
Proceeds on settlement of derivatives
61135
Net change in customer deposits
(1, 882)
Increase in long-term debt 10
110,000
Repayment of long-term debt
(89,557)
Capital contributions received
31408
Payment of interest on lease liability
(12)
Payment of lease liability (net of receipts)
(28)
Cash provided by financing activities
$ 28,064
Net cash provided (used) during period
27,883
Cash and cash equivalents, beginning of period
(12,694)
Cash and cash equivalents, end of period
$ 15,189
The accompanying notes are an integral part of these financial statements.
Page 148 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
1. Reporting Entity
Enova Energy Corporation ("the Corporation") is wholly owned by the Cities of Kitchener and Waterloo,
and the Townships of Wellesley, Wilmot and Woolwich. The Corporation oversees the operations of
Enova Power Corp. ("EPC"), a regulated distribution company, and Kitchener Energy Services Inc.
("KESI"), an unregulated retail services company, and Alliance Metering Solutions Inc. CAMS"), a
submetering service provider. The Corporation also owns 66.7% of Grand River Energy Solutions
Corp. ("GRE"), a generation and renewable energy solutions company, and 30.47% of Eyedro Green
Solutions Inc. ("Eyedro"), a privately owned company with a focus on affordable energy products.
The Corporation is located in the Regional Municipality of Waterloo. The address of the Corporation's
registered head office is 301 Victoria Street South, Kitchener, Ontario, Canada.
The financial statements are for the Corporation as at and for the period ended December 31, 2022.
Legal Amalgamation
On January 12, 2022, the Corporation entered into a Merger Participation Agreement ("MPA") with
Kitchener; Wilmot; Waterloo; Woolwich; Wellesley; Kitchener Power Corp. ("KPC"); Kitchener Energy
Services Inc. ("KESI"); Kitchener -Wilmot Hydro Inc. CKWHI"); Waterloo North Hydro Inc. ("WNHI");
Waterloo North Holding Company ("WNHC"); and AMS. KPC was the parent company of KWHI and
KESI. WNHC was the parent company of WHNI and AMS.
For accounting purposes, former KPC was deemed the acquirer under the Amalgamation Transaction.
Consequently, the opening balances in these statements are the balances of former KPC as at
September 1, 2022.
The MPA provided the terms and conditions under which WNHC and KPC would amalgamate (the
"MergeCo Amalgamation"), followed immediately by the amalgamation of the WNHI and KWHI ("LDC
Amalgamation"). The LDC Amalgamation was subject to the approval of the OEB based on a Mergers,
Acquisitions, Amalgamations and Divestitures Application ("MAADs Application") process. The
MAADs Application included a request for Ontario Energy Board ("OEB") approval for the continuation
of regulated rates and charges of the predecessor LDCs of the Corporation. On June 28, 2022, the
OEB issued a Decision and Order approving the LDC Amalgamation.
The MergeCo Amalgamation occurred on September 1, 2022 (the "closing date") and the parent
corporation continues as Enova Energy Corporation, a corporation amalgamated under the laws of
Ontario. On September 1, 2022, immediately following the MergeCo Amalgamation, WNHI legally
amalgamated with KWHI and continues as EPC, a corporation amalgamated under the laws of
Ontario.
Page 149 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
2. Basis of Presentation
(a) Statement of compliance
The Corporation's financial statements have been prepared following International Financial
Reporting Standards ("IFRS").
The financial statements were approved by the Board of Directors of the Corporation on April 28,
2023.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following:
(i) Where held, financial instruments at fair value through profit or loss, including those held for
trading, are measured at fair value.
(ii) Contributed assets are initially measured at fair value.
The methods used to measure fair values are discussed further in note 23.
(c) Functional and presentation currency
These financial statements are presented in Canadian dollars, which is the Corporation's functional
currency. All financial information presented in Canadian dollars has been rounded to the nearest
thousand.
(d) Use of estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make
judgments, estimates, and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses, and disclosure of contingent assets
and liabilities. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
Information about judgments made in applying accounting policies that have the most significant
effect on the amounts recognized in these financial statements is included in the following notes:
(i) Note 4(c) — Revenue Recognition — determination of the performance obligation for
contributions from customers and the related amortization period
(ii) Note 4(e) — Capital assets (Property, plant and equipment)
(iii) Note 12 — Employee future benefits
(iv) Note 18 — Commitments and contingencies
Page 150 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
2. Basis of Presentation (continued)
(e) Rate regulation
The Corporation is regulated by the OEB, under the authority granted by the Ontario Energy Board
Act, 1998. Among other things, the OEB has the power and responsibility to approve or set rates for
the transmission and distribution of electricity, providing continued rate protection for electricity
consumers in Ontario, and ensuring that transmission and distribution companies fulfill obligations to
connect and service customers. The OEB may also prescribe license requirements and conditions
of service to LDCs, such as the Corporation, which may include, among other things, record keeping,
regulatory accounting principles, separation of accounts for distinct businesses, and filing and
process requirements for rate setting purposes.
Rate setting
Distribution revenue
For the distribution revenue included in electricity sales, the Corporation files a "Cost of Service"
("COS") rate application with the OEB every five years where rates are determined through a review
of the forecasted annual amount of operating and capital expenses, debt and shareholder's equity
required to support the Corporation's business. The Corporation estimates electricity usage and the
costs to service each customer class to determine the appropriate rates to be charged to each
customer class. The COS application is reviewed by the OEB and interveners. Rates are approved
based on this review including any required revisions.
In the intervening years, an Incentive Rate Mechanism application ("IRM") is filed. An IRM application
results in a formulaic adjustment to distribution rates set under the last COS application. The previous
year's rates are adjusted for the annual change in the Gross Domestic Product Implicit Price Inflator
for Final Domestic Demand ("GDP IPI -FDD") net of a "stretch factor" determined by the relative
efficiency of an electricity distributor.
As a licensed distributor, the Corporation is responsible for billing customers for electricity generated
by third parties and the related costs of providing electricity service, such as transmission services
and other services provided by third parties. The Corporation is required, under regulation, to remit
such amounts to these third parties, irrespective of whether the Corporation ultimately collects these
amounts from customers.
In February 2022, KWH I and WN H I filed a Mergers, Acquisitions, Amalgamations and Divestitures
("MAADs") application (the "MAADs Application") with the OEB under the Handbook to Electricity
Distributor and Transmitter Consolidation (the "MAADs Handbook") seeking approval for the
Amalgamation Transaction. The MAADs Application included a request for OEB approval for the
continuation of regulated rates and charges of the predecessor LDCs of the Corporation.
On June 28, 2022, the OEB issued its Decision and Order in respect of the MAADs Application. The
OEB granted the requested approvals and also approved a rebasing deferral period of 10 years,
under which the Corporation will operate individual "rate zones" (based on the continuing rates and
underlying cost structures of the predecessor LDCs).
Page 151 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
3. Basis of Presentation (continued)
(e) Rate regulation (continued)
As provided within the OEB Report of the Board: Rate -Making Associated with Distributor
Consolidation, the rate zones of the Corporation will continue on the Price Cap IR method. At its
option, Enova Energy Corporation is permitted to apply for (a) inflationary increases to rates, adjusted
for an efficiency factor; and (b) ICM rate adjustments that provide financing and recovery of
incremental discrete capital projects.
The predecessor utilities to the Corporation filed separate applications for the approval of electricity
distribution rates as follows:
• KWHI filed an annual Cost of Service Application with the OEB on April 30, 2019 for distribution
rates effective January 1, 2020 to December 31, 2020.
• WNHI filed an annual Cost of Service Application with the OEB on June 30, 2020 for distribution
rates effective January 1, 2021 to December 31, 2021.
The predecessor utilities to the Corporation filed separate applications for electricity distribution rates
effective January 1, 2023, with decisions as follows:
• KWHI — On December 8, 2022, Enova — KWHI rate zone received approval for IRM rates
effective January 1, 2023. The distribution rates will be increased by 3.55%.
• WNHI — On December 8, 2022, Enova — WNHI rate zone received approval for IRM rates
effective January 1, 2023. The distribution rates will be increased by 3.40%.
Electricity rates
The OEB sets electricity prices for low-volume consumers based on an estimate of how much it will
cost to supply the province with electricity for the next year. All low-volume customers without a
contract with an energy retailer are charged the OEB-mandated rate for electricity. If a customer
(regardless of volume) has a retailer agreement, then retailer rates are charged instead. All remaining
consumers pay the market price for electricity. The Corporation is billed for the cost of the electricity
that its customers use and passes this cost on to the customer at cost without a markup.
Page 152 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Business Combination
On September 1, 2022, KPC amalgamated with WNHC to form the Corporation. Under the Amalgamation
Transaction, shares of the former KPC and WNHC were exchanged for the voting common shares of the
Corporation. The Amalgamation Transaction has been recognized as a business combination following
FIRS 3, Business Combinations using the acquisition method with the former KPC deemed as the
acquirer based on its relative size compared to that of the former WNHC. These financial statements
include the net fair value of the assets of former WNHC as at September 1, 2022; and the net assets of
the former KPC at its carrying amounts at September 1, 2022.
The aggregate purchase price was $259,859 for 2,000 common shares and 218,132 Class A special
shares which were immediately converted to 42,120 common shares in the amalgamated company. The
acquired value of WNHC's Investment in subsidiaries and associates is inclusive of $140,077 of goodwill
associated to the amalgamation of WN H I and KWH I .
The following table summarizes the estimated fair value of assets acquired and liabilities assumed at the
date of amalgamation:
Page 153 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
3. Business Combination (continued)
Accounts receivable
Unbilled revenue
Inventories
Prepaid expenses
Derivative asset
Property, plant and equipment
Intangible assets
Deferred tax assets
Investment in subsidiaries and associates
Regulatory deferral account debit balances
Short term bank indebtedness
Accounts payable and accrued liabilities
Income tax payable
Dividends payable
Current portion of customer deposits
Long-term debt
Notes payable to shareholder
Long term portion of customer deposits
Deferred revenue
Employee future benefits
Deferred tax liability
Regulatory deferral account credit balances
Deferred taxes associated with regulatory accounts
Goodwill
WNHC Acquired
Value
6
20, 264
18782
51622
837
5, 848
267, 421
4,711
197
1,172
24, 555
(10,529)
(25)234)
(1,427)
(2, 656)
(3,271)
(89,410)
(33)292)
(3)196)
(31) 312)
(4)568)
(14) 484 )
(5, 536)
(4, 712)
$ 11%782
140,077
Total purchase price $ 259,859
The valuation technique used for the purchase of WNHC was the discounted cash flow ("DCF") approach.
Under the DCF approach, the expected future cash flows are discounted to their present value equivalent
using appropriate market-based risk-adjusted rates of return. The fair market value of WNHC was
determined using a discounted cash flows method with an implied valuation multiple of 1.53x regulated
rate base. Consideration of implied multiples of recent transactions in the industry was used and the
1.53x was determined to be comparable. The business enterprise value was then adjusted by redundant
assets and debt/debt equivalents to arrive at the fair market value of assets. The difference between this
fair market value and the net book value of assets as of September 1, 2022 determined goodwill.
Page 154 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies
The accounting policies set out below have been applied consistently in all periods presented in these
financial statements, except where otherwise described in Note 24 — Changes in Accounting Policies.
(a) Basis of Consolidation
These consolidated financial statements include the accounts of the Corporation and its
wholly owned subsidiaries: (i) EPC; (ii) KESI; and (iii) AMS, as well as its controlling interest in
GRE. The Corporation's investment in Eyedro is accounted for in the consolidated financial
statements using the equity method of accounting.
Subsidiaries are entities controlled by the Corporation. The financial statements of the
subsidiaries are included in these consolidated financial statements from the date on which
control commences until the date on which control ceases.
Associates are investments over which the Corporation has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the
investee. Equity accounting involves recording the investment in associates initially at cost, and
adjusting the carrying value of the investment from the date of acquisition based on the
Corporation's share of the profit or loss of the associates included in the consolidated income
statement.
All significant inter -company accounts and transactions have been eliminated.
(b) Financial instruments
At initial recognition, the Corporation measures its financial assets at fair value. In the case of
a financial asset not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset are included in the initial measurement.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in
profit or loss. Subsequent measurement of the financial asset depends on the classification
determined on initial recognition. Financial assets are classified as either amortized cost,
fair value through other comprehensive income or fair value through profit or loss,
depending on its business model for managing the financial assets and the contractual cash
flow characteristics of the financial assets. Financial assets are not reclassified after their initial
recognition unless the Corporation changes its business model for managing financial assets.
Derivative assets are always classified as fair value through profit or loss on inception.
Financial liabilities are initially measured at fair value, net of transaction costs incurred. They
are subsequently carried at amortized cost using the effective interest rate method; any
difference between the proceeds (net of transaction costs) and the redemption value is
recognized as an adjustment to interest expense over the period of the borrowings.
Page 155 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(c) Revenue Recognition
Sale and distribution of electricity
The performance obligations for the sale and distribution of electricity are recognized over time using
an output method to measure the satisfaction of the performance obligation. The value of the
electricity services transferred to the customer is determined based on cyclical meter readings plus
estimated customer usage from the last meter reading date to the end of the period and represents
the amount that the Corporation has the right to bill. Revenue includes the cost of electricity supply,
distribution, and any other regulatory charges. The related cost of power is recorded based on power
used.
For customer billings related to electricity generated by third parties and the related costs of providing
electricity service, such as transmission services and other services provided by third parties, the
Corporation has determined that it is acting as a principal for these electricity charges and, therefore,
has presented electricity revenue on a gross basis.
Capital contributions
Developers are required to contribute towards the capital cost of construction of distribution assets
to provide ongoing service. The developer is not a customer and therefore the contributions are
scoped out of I FRS 15 Revenue from Contracts with Customers. Cash contributions, received from
developers are recorded as deferred revenue. When an asset other than cash is received as a capital
contribution, the asset is initially recognized at its fair value, with a corresponding amount recognized
as deferred revenue. The deferred revenue, which represents the Corporation's obligation to continue
to provide the customers access to the supply of electricity, is amortized to income on a straight-line
basis over the useful life of the related asset.
Certain customers are also required to contribute towards the capital cost of construction of
distribution assets to provide ongoing service. These contributions fall within the scope of I FRS 15
Revenue from Contracts with Customers. The contributions are received to obtain a connection to
the distribution system to receive ongoing access to electricity. The Corporation has concluded that
the performance obligation is the supply of electricity over the life of the relationship with the customer
which is satisfied over time as the customer receives and consumes the electricity. Revenue is
recognized on a straight-line basis over the useful life of the related asset.
Other revenue
Revenue earned from the provision of services is recognized as the service is rendered.
Government grants and the related performance incentive payments under CDM programs are
recognized as revenue in the period when there is reasonable assurance that the program conditions
have been satisfied and the payment will be received.
Page 156 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(c) Revenue Recognition (continued)
Solar Generation
Revenue is principally produced from the generation of solar electricity which is sold to the Ontario
Energy Market through the Independent Electricity System Operator ("IESO"). The performance
obligation for the sale of electricity is satisfied when the electricity is delivered to the Ontario Energy
Grid administered by the IESO. The value of the electricity sold to the customer is determined based
on the meter readings at the rate designated in the contract with the customer.
(d) Inventory
Inventories consist of repair parts, supplies, and materials held for future capital expansion and are
valued at lower of weighted average cost and net realizable value. Net realizable value is the
estimated selling price in the ordinary course of business, less estimated selling expenses.
(e) Property, Plant and Equipment
Cost in items of property, plant and equipment ("PP&E") used in rate—regulated activities and
acquired before January 1, 2014 are measured at deemed cost established on the transaction date,
less accumulated depreciation. All other items of PP&E are measured at cost, or, where the item is
transferred from customers, its fair value, less accumulated depreciation. Consistent with I FRS 1,
the Corporation elected to use the carrying amount as previously determined under Canadian GAAP
as the deemed cost at January 1, 2014, the transition date to IFRS.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of
self -constructed assets includes the cost of materials, direct labour, and any other costs directly
attributable to bringing the asset to a working condition for its intended use.
Borrowing costs on qualifying assets are capitalized as part of the cost of the asset based upon the
actual cost of debt incurred on the Corporation's borrowings. Qualifying assets are considered to be
those that take over 12 months to construct.
When parts of an item of PP&E have different useful lives, they are accounted for and depreciated
as separate items (major components) of PP&E.
Gains and losses on the disposal of an item of PP&E are determined by comparing the proceeds
from disposal, if any, with the carrying amount of the item of PP&E and are recognized net within
other income in profit or loss.
Major spare parts and standby equipment are recognized as items of PP&E.
The cost of replacing a part of an item of PP&E is recognized in the net book value of the item if it is
probable that the future economic benefits embodied within the part will flow to the Corporation and
its cost can be measured reliably. In this event, the replaced part of PP&E is written off, and the
related gain or loss is included in profit or loss. The costs of the day-to-day servicing of PP&E are
recognized in profit or loss as incurred.
Page 157 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(e) Property, Plant and Equipment (continued)
Depreciation is calculated on the cost basis of the asset and is recognized in profit or loss on a
straight-line basis over the estimated useful life of each part or component of an item of PP&E. Land
and land rights are not depreciated. Construction -in -progress assets are not depreciated until the
projects are complete and in service.
The estimated useful lives are as follows:
Buildings
20-50 years
Transformer and substation equipment
15-50 years
Supervisory control and data acquisition (SCADA) equipment
15 years
Distribution system
25-60 years
Meters
15-25 years
General equipment
3-10 years
Solar equipment
15-20 years
Right -of -use assets
15-20 years
Depreciation methods, useful lives, and residual values are reviewed at each reporting date and
adjusted prospectively if appropriate.
Page 158 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(f) Intangible assets
(i) Computer Software
Computer software that is acquired or developed by the Corporation, including software that is
not integral to the functionality of equipment purchased which has finite useful lives, is
measured at cost less accumulated amortization.
(ii) Land Rights
Payments to obtain rights to access land ("land rights") are classified as intangible assets.
These include payments made for easements, right of access, and right of use over land for
which the Corporation does not hold title and are not amortized. Land rights are measured at
cost less accumulated amortization and accumulated impairment losses.
(iii) Amortization
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful
lives of intangible assets, other than goodwill, from the date that they are available for
use. The estimated useful lives are:
Computer software 3-10 years
Land rights 100 years
Solar contracts and permits 15-20 years
Amortization methods and useful lives of all intangible assets are reviewed at each reporting
date and adjusted prospectively if appropriate.
(g) Goodwill
Goodwill arising on the acquisition of subsidiaries or on amalgamation is measured at cost and
not amortized.
Page 159 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(h) Impairment
(i) Financial assets measured at amortized cost:
A loss allowance for expected credit losses on financial assets measured at amortized cost is
recognized at the reporting date. The loss allowance is measured at an amount equal to the
lifetime expected credit losses for the asset.
(ii) Non-financial assets:
The carrying amounts of the Corporation's non-financial assets, other than inventories and
deferred tax assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset's recoverable amount is
estimated. Goodwill and intangible assets with indefinite lives are tested; annually for
impairment; and when circumstances indicate that the carrying value may be impaired.
For impairment testing, assets are grouped into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets
or groups of assets (the "cash -generating unit"). Goodwill acquired in a business combination
is allocated to groups of cash -generating units ("CGUs") that are expected to benefit from the
synergies of the combination. The recoverable amount of an asset or cash -generating unit is
the greater of its value in use and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the
asset.
An impairment loss is recognized if an asset's carrying amount or CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses
relating to CGUs are allocated first to reduce the carrying amount of any goodwill allocated to
the CGUs and then to reduce the carrying amounts of the other assets in the CGUs on a pro -
rata basis.
An impairment loss in respect of goodwill is not reversed. For assets other than goodwill,
impairment recognized in prior periods is assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss
is reversed only to the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortization, if no impairment
loss had been recognized.
Goodwill arising on the acquisition of subsidiaries is measured at cost and is not amortized.
Goodwill is tested annually for impairment.
Page 160 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(i) Provisions
A provision is recognized if, as a result of a past event, the Corporation has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
(j) Regulatory deferral accounts
Regulatory deferral account debit balances represent costs incurred over amounts billed to the
customer at OEB-approved rates. These amounts have been accumulated and deferred in
anticipation of their future recovery in electricity distribution rates. Regulatory deferral account credit
balances represent amounts billed to the customer at OEB-approved rates over costs incurred by the
Corporation.
Regulatory deferral account debit balances are recognized if it is probable that future billings in an
amount at least equal to the capitalized cost will result from inclusion of that cost in allowable costs
for rate -making purposes. The offsetting amount is recognized in profit and loss. The debit balance
is reduced by the amount of customer billings as electricity is delivered to the customer and the
customer is billed at rates approved by the OEB for the recovery of the capitalized costs.
Regulatory deferral account credit balances are recognized if it is probable that future billings in an
amount at least equal to the credit balance will be reduced as a result of rate -making activities. The
offsetting amount is recognized in profit and loss. The credit balance is reduced by the amounts
returned to customers as electricity is delivered to the customer at rates approved by the OEB for the
return of the regulatory account credit balance.
The probability of recovery or repayment of the regulatory account balances is assessed annually
based on the likelihood that the OEB will approve the change in rates to recover or repay the balance.
Any resulting impairment loss is recognized in profit and loss in the period incurred.
Regulatory deferral accounts attract interest at OEB-prescribed rates. With the exception of the
regulatory deferral account for Pension and Other Future benefits ("OPEBs"), from September 1,
2022 to September 30, 2022 the rate was 2.20%. From October 1, 2022 to December 31, 2022 the
rate was 3.87%.
The interest rates for the regulatory OPEB account were as follows: from September 1, 2022 to
September 30, 2022 the rate was 4.66%. From October 1, 2022 to December 31, 2022 the rate was
5.01%.
Page 161 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(k) Employee future benefits
(i) Pension Plan
The Corporation provides a pension plan for its employees through the Ontario Municipal
Employees Retirement System ("OMERS"). OMERS is a multi-employer pension plan which
operates as the Ontario Municipal Employees Retirement Fund ("the Fund") and provides
pensions for employees of Ontario municipalities, local boards, public utilities, and school boards.
To the extent that the Fund finds itself in an underfunded position, additional contribution rates
may be assessed to participating employers and members.
The Fund is a contributory defined benefit pension plan, which is financed by equal contributions
from participating employers and employees and by the investment earnings of the Fund (note
20). The Corporation recognizes the expense related to this plan as contributions are made.
(ii) Future Benefits, other than pension
Future benefits provided by the Corporation include health, dental, and life insurance benefits.
These plans provide benefits for some of its retired employees. Future benefit expense is
recognized in the period in which the employees render the services.
Future benefits are recorded on an accrual basis. The accrued benefit obligations and current
service cost are calculated using the projected benefits method pro -rated on service and based
on assumptions that reflect management's best estimate. The current service cost for a period
is equal to the actuarial present value of benefits attributed to employees' services rendered in
the period. Gains and losses are recognized in the current period. Actuarial gains and losses
arising from defined benefit plans are recognized immediately in other comprehensive income
and reported in retained earnings.
The future health, dental, and life insurance benefits were provided to retired employees of KWHI
and WNHI as separate entities and as such, are not identical offerings. These plans have been
maintained in their original offerings.
(I) Deferred revenue and assets transferred from customers
Certain customers and developers are required to contribute towards the capital cost of construction
to provide ongoing service. When an asset is received as a capital contribution, the asset is initially
recognized at its fair value, with the corresponding amount recognized as deferred revenue. Deferred
revenue represents the Corporation's obligation to continue to provide customers access to the
supply of electricity and is amortized to income on a straight-line basis over the economic useful life
of the acquired or contributed asset, which represents the period of ongoing service to the customer.
Page 162 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(m) Leased assets
At inception of a contract, the Corporation assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration. To assess whether a contract conveys the
right to control the use of an identified asset, the Corporation assesses whether:
(i) The contract involves the use of an identified asset — this may be specified explicitly or implicitly
and should be physically distinct or represent substantially all the capacity of a physically
distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
(ii) The Corporation has the right to obtain substantially all the economic benefits from the use of
the asset throughout the period of use; and
(iii) The Corporation has the right to direct the use of the asset. The Corporation has this right when
it has the decision-making rights that are most relevant to changing how and for what purpose
the asset is used. In rare cases where the decision about how and for what purpose the asset
is used is predetermined, the Corporation has the right to direct the use of the asset if either
the Corporation has the right to operate the asset, or the Corporation designed the asset in a
way that predetermines how and for what purpose it will be used.
The Corporation recognizes a right -of -use asset and a lease liability at the lease commencement
date. The right -of -use asset is initially measured at cost, which comprises the initial amount of the
lease liability, adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or
the site on which it is located, less any lease incentives received.
The right -of -use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right -of -use asset or the end of
the lease term. The estimated useful life of a right -of -use asset is determined on the same basis as
those for property, plant and equipment. In addition, the right -of -use asset is periodically reduced by
impairment losses, if any, and adjusted for certain re -measurements of the lease liability.
(n) Interest income and interest costs
Interest income is recognized as it accrues in profit or loss, using the effective interest method.
Interest income comprises interest earned on cash and cash equivalents, and on regulatory assets.
Interest costs comprise interest expense on borrowings, finance lease obligations, customer deposits
and regulatory liabilities, and unwinding of the discount on provisions and impairment losses on
financial assets. Interest costs are recognized as an expense unless they are capitalized as part of
the cost of qualifying assets.
Page 163 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(o) Corporate Income taxes
The income tax expense comprises current and deferred tax. Income tax expense is recognized in
profit or loss except to the extent that it relates to items recognized directly in equity, in which case,
it is recognized in equity.
The current tax-exempt status of the Corporation under the Income Tax Act (Canada) and the
Corporations Tax Act (Ontario) reflects the fact that the Corporation is wholly owned by municipalities.
This tax-exempt status might be lost in a number of circumstances, including if the shareholder
(municipalities) ceases to own 90% or more of the shares or capital of the Corporation, or if a non-
government entity has rights immediately or in the future, either absolutely or contingently, to acquire
more than 10% of the shares of the Corporation.
Commencing October 1, 2001, the Corporation is required, under the Electricity Act, 1998, to make
payments in lieu of corporate taxes to the Ontario Electricity Financial Company. These payments
are calculated under the rules for computing income and other relevant amounts contained in the
Income Tax Act (Canada) and the Corporations Tax Act (Ontario) as modified by the Electricity Act,
1998 and related regulations.
As a result of becoming subject to payments in lieu of corporate income taxes ("PILs"), the
Corporation's taxation period was deemed to have ended immediately beforehand and a new
taxation period was deemed to have commenced immediately thereafter. The Corporation was
therefore deemed to have disposed of each of its assets at its then fair market value and to have
reacquired such assets at that same amount for purposes of computing its future income subject to
PILs. For purposes of certain provisions, the Corporation was deemed to be a new company and,
as a result, tax credits or tax losses not previously utilized by the Corporation would not be available
to it after the change in tax status. Essentially, the Corporation was taxed as though it had a "fresh
start" at the time of its change in tax status.
Current tax is the tax payable on the taxable income for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
periods.
Deferred tax is recognized using the balance sheet method. Under this method, deferred income
taxes reflect the net tax effects of temporary differences between the tax basis of assets and liabilities
and their carrying amounts for accounting purposes, as well as for tax losses available to be carried
forward to future periods that are likely to be realized. Deferred tax assets and liabilities are measured
using enacted or substantively enacted rates, at the reporting date, expected to apply to taxable
income in the periods in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the date of enactment or substantive enactment.
Page 164 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
4. Significant Accounting Policies (continued)
(p) Business combinations
The Corporation accounts for business combinations using the acquisition method when control is
transferred to the Corporation. The consideration transferred in the acquisition is generally measured
at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually
for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of preexisting
relationships. Such amounts are generally recognized in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to
pay contingent consideration that meets the definition of a financial instrument is classified as equity,
then it is not re -measured and settlement is accounted for within equity.
Otherwise, other contingent consideration is re -measured at fair value at each reporting date and
subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.
5. Accounts Receivable
December 31,
2022
Trade receivables
$ 28,273
1 ESO receivable
2, 962
Miscellaneous receivables
41107
Allowance for bad debt
(800)
Other
118
Total Accounts Receivable
$ 34,660
6. Property, Plant and Equipment
(a) Cost or deemed cost
Page 165 of 264
Distribution
Equipment
Land &
Building
Other Fixed
Assets
Construction
in Progress
Right -of -use
assets
Total
Balance at September 1, 2022 $
313,687
$ 28,575
$ 7,811
$ 4,359
$ 601 $
3553033
Acquired value - WNHC
229,420
241674
67399
61928
-
2673421
Acquired control - GRE
-
-
3,295
-
889
43184
Additions
205323
230
1,499
(3,490)
-
183562
Remeasurement
-
-
-
-
(73)
(73)
Disposals / retirements
(513)
(10)
(909)
-
-
(11432)
Balance at December 31, 2022 $
562,917
$ 53,469
$ 18,095
$ 71797
$ 15417 $
643,695
Page 165 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
6. Property, Plant and Equipment (continued)
(b) Accumulated depreciation
(d) Security
At December 31, 2022, the Corporation had zero properties subject to a general security
agreement.
(e) Borrowing costs
During the period, borrowing costs of $nil were capitalized as part of the cost of property, plant and
equipment.
(fi) Allocation of depreciation and amortization
The depreciation of property, plant and equipment and the amortization of intangible assets have
been allocated to profit or loss as follows:
Distribution
Land &
Other Fixed
Construction
Right -of -use
maintenance
services
Equipment
Building
Assets
in Progress
Assets
Total
Balance at September 1, 2022
$ 61,017
$ 4,635
$ 1,563
$ -
$ 40 $
675255
Depreciation charge
5,944
538
1,192
-
34
71708
Disposals / retirements
(513)
(10)
(909)
-
-
(11432)
Balance at December 31, 2022
$ 66,448
$ 51163
$ 1,846
$ -
$ 74 $
73,531
(c) Carrying amounts
Distribution
Land &
Other Fixed
Construction
Right -of -use
Equipment
Building
Assets
in Progress
Assets
Total
At December 31, 2022
$ 496,469
$ 481306
$ 165249
$ 77797
$ 1, 343 $
5701164
(d) Security
At December 31, 2022, the Corporation had zero properties subject to a general security
agreement.
(e) Borrowing costs
During the period, borrowing costs of $nil were capitalized as part of the cost of property, plant and
equipment.
(fi) Allocation of depreciation and amortization
The depreciation of property, plant and equipment and the amortization of intangible assets have
been allocated to profit or loss as follows:
Page 166 of 264
Operations and
Customer
General and Energy
maintenance
services
administration conservation
expense
expense
expense expense
Amortization Total
December 31, 2022:
Depreciation of property, plant
$ 640
$ 1
$ 11 $ -
$ 7,056 $ 79708
and equipment
Amortization of intangible assets
-
-
- -
748 748
$ 640
$ 1
$ 11 $ -
$ 79804 $ 89456
Page 166 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
7. Intangible Assets and Goodwill
(a) Cost or deemed cost
Computer Land FIT Work in
Software Rights Contracts Progress Total
Balance at September 1, 2022 $ 12, 062 $ 8 $ - $ - $ 12,070
Acquired value - WNHC 27394 17199 - 11118 4,711
Acquired control - GRE - - 31906 - 31906
Additions 253 39 - (146) 146
Disposals / retirements (185) - - - (185)
Balance at December 31, 2022 $ 14,524 $ 1,246 $ 3,906 $ 972 $ 20,648
(b) Accumulated amortization
Computer Land FIT
Software Rights Contracts Total
Balance at September 1, 2022 $ 1, 506 $ 8 $ - $ 15514
Amortization charge 641 - 107 748
Disposal/retirements (185) - (185)
Balance at December 31, 2022 $ 13962 $ 8 $ 107 $ 21077
(c) Carrying amounts
Computer Land FIT Work in
Software Rights Contracts Progress Total
At December 31, 2022 $ 125562 $ 1, 238 $ 31799 $ 972 $ 18,571
Page 167 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
8. Income Tax Expense
2022
Current period
$
1,268
Adjustment for prior periods
156
Deferred
(229)
Income tax expense
$
19195
Reconciliation of effective tax rate:
2022
Net comprehensive income for the period
$
8,549
Income tax expense
1,195
Income from operations before income taxes
$
9,744
Statutory Canadian federal and provincial income tax rate
26.50%
Expected taxes on income
$
29582
Changes in income taxes resulting from:
Permanent differences
6
Other temporary differences
(1,598)
Adjustment for prior periods
205
$
(1, 387)
Income tax expense
$
11195
Significant components of the Corporation's deferred tax balances are as
fol I ows :
December 31,
2022
Deferred tax assets (liabilities):
Plant and equipment
$
(48)572)
Deferred revenue
21, 569
Employee future benefits
25041
Non -vested sick leave
340
Unrealized gain on derivatives
(157)
Allowance for doubtful accounts
212
Other
1,050
$
(23, 517)
Regulatory deferred tax asset
$
32,624
Deferred taxes associated with regulatory accounts
(8)645)
Page 168 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
8. Income Tax Expense (continued)
In 2022, the legacy WNHI entity underwent a PILs audit from the Ministry of Finance (the "Ministry")
for the taxation years of 2017 and 2018. The audit resulted in two significant adjustments. The
following items were previously accrued as uncertain tax treatments and remain so at December 31,
2022:
CCA classification of meters
The Ministry disagreed with WNHI's assessment that these assets should be reported under Class 8
and made an adjustment to move the assets to Class 47. This is a similar adjustment that was made
to taxations years 2013 to 2016 which were audited in previous periods. WNHI made an accrual in
fiscal year 2021 to accrue future adjustments for the years 2017 to 2020. The accrual for unaudited
years has been recorded in income taxes payable as a contingent liability. WNHI issued a joint court
appeal with KWHI to overrule the decision with other distributors in Ontario who had similar
adjustments made. The appeal remains unresolved as of the date of these statements.
Disallowed interest expense to the parent company
The Ministry determined that the amount of interest paid during 2017 and 2018 to WNHC exceeded
a reasonable amount. Therefore, the Ministry adjusted the interest expense allowable to the OEB-
deemed rate that was applicable during the period of 4.54%. WNHI appealed the decision through a
Notice of Objection which remains unresolved as of the date of these statements. An amount
anticipated to be disallowed in future audits for the taxation years of 2019 to 2022 has been recorded
in income taxes payable as an uncertain tax treatment.
Page 169 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
9. Regulatory Deferral Account Balance
The following is a reconciliation of the carrying amount for each class of regulatory deferral
account
balances:
Balances
Transfer
Recovery/
2022 arising in the
between Recovery /
2022
reversal
Opening Acquired period
accounts reversal
Ending
period (years)
Regulatory deferral account debit balances
Group 1 accounts $ 107931 $ 6,727 $ (4)
$ 510 $ - $
18,164
Note 1
Regulatory asset recovery accounl 3,303 (56) -
- (2,469)
778
Note 1
Deferred tax asset 15,398 171785 (559)
- -
32,624
Note 2
Other regulated accounts 136 99 71
- -
306
Note 3
Total amount related to
regulatory deferral account $ 29,768 $ 24,555 $ (492)
$ 510 $ (21469) $
51,872
debit balances
Balances
Transfer
Recovery/
2022 arising in the
between Recovery /
2022
reversal
Opening Acquired period
accounts reversal
Ending
period (years)
Regulatory deferral account credit balances
Group 1 accounts $ 208 $ 5,534 $ (3,408)
$ 510 $ - $
5,504
Note 1
Other regulated accounts 562 2 4
568
Note 3
Total amount related to
regulatory deferral account $ 31430 $ 51536 $ (3,404)
$ 510 $ - $
6,072
credit balances
2022
Movements in regulatory accounts
Net change in regulatory deferral account debit and credit balances
$ 443
Less movement related to the balance sheet
Deferred income tax
559
Deferred revenue
516
Net movement in regulatory deferral account balances related to profit or loss
and the related deferral tax
movement
$ 19518
Note 1: The Corporation has been approved for collection of these amounts in its 2022 filings for
2023 rates.
Note 2: The Corporation has not sought approval for the disposition of this amount as changes in
underlying assumptions may reduce the amounts recorded in the account. Enova may seek refunds
in the future.
Note 3: In December 2020, the legacy KWHI entity was informed that beginning June 2015 charges
were not included in the monthly power bill for one delivery point for Transmission Network Charges.
KWHI accrued a payable of $6 million in 2020, offset by a regulatory asset. These monies were
collected through an OEB-approved rate rider through December 2022.
Page 170 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
10. Long -Term Debt
On October 27, 2022, Enova Energy Corporation entered into a credit agreement with Bank of
Montreal ("BMO") whereby all outstanding credit facilities previously provided by CIBC were
transferred to BMO. This included an operating line of credit for legacy WNHI ($15,000) as well as
the consolidated long-term debt and related swap. As a result, the debt was re -issued under BMO
and the swap agreement was terminated on November 2, 2022. The value of the terminated swap,
less applicable fees, was $6,135.
The BMO credit facility is for a total of $200,000 of which the Corporation borrowed $110,000 in long-
term debt from BMO with no defined repayment terms. The full balance is variable-rate and has not
been hedged with any derivatives.
In March 2021, the Corporation entered into an amended Credit Facility Agreement ("Credit Facility")
with a Canadian Chartered Bank. The Credit Facility is a demand revolving credit facility, which
provides funding for: (i) up to $11,700 for capital expenditures; and (ii) $1,800 US for interest rate
hedging. Loans advanced under the credit facility are amortized on a mortgage style basis over a
period which sit he lesser of: (a) 20 years; or (b) the length of the revenue contract underlying the
asset. Interest on the loan(s) are at Prime or Bankers acceptances plus 1 %.
As of December 31, 2022, the Corporation had the following loans outstanding under the Credit
Facility:
Swap Monthly
Bank loans Rate Payments Term 2022
Term loan 1
4.205%
$
30.00
August 15, 2035
$ 35365
Term loan 2
3.845%
$
18.00
December 21, 2034
$ 15922
Term loan 3
2.510%
$
11.00
July 31, 2040
$ 13759
Term loan 4
2.365%
$
4.00
July 31, 2035
$ 552
$ 7,598
The aggregate amount of expected principal repayments required under the Credit Facility are as follows:
2023
$ 453
2024
470
2025
487
2026
505
2027
526
Thereafter
51157
$ 71598
Page 171 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
10. Long -Term Debt (continued)
Interest rate swaps
The Corporation has entered into interest swap agreements with a Canadian chartered bank for the
purpose of eliminating the risk of fluctuating interest rates and removing the economic impact of
interest rate volatility on its debt. The swap instruments result in the Corporation receiving interest at
the 30 -day banker' acceptance floating rate and require the Corporation to pay the fixed rate in the
swap instrument.
The term of each individual swap instrument matches the amortization period of the corresponding
bank loan although, each instrument can be terminated in 30 days, due to the Credit Facility being a
demand revolving bank loan.
The swaps have a put provision whereby on the five-year anniversary of each swap, either party can
unilaterally elect to terminate the contract requiring a cash payment upon settlement based on the
fair value of the swap instrument on that date.
IFRS requires the Corporation to determine and record the fair value of its interest rate swap
agreements in the Statement of Financial Position, with changes in fair values being recorded in
unrealized gains (losses) from interest rate swaps in the Statement of Comprehensive Income (Loss).
As a result, the Corporation has recorded interest rate swap assets of $592 and recognized a
corresponding unrealized gain on interest rate swaps of $953.
There is no impact on current PILs. Over the term of the debt, the non-cash charges and assets are
expected to reverse into income.
Page 172 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
11. Notes Payable to Shareholder
2022
Senior unsecured debentures:
City of Kitchener
$ 70,998
City of Waterloo
271404
Township of Woolwich
31355
Township of Wilmot
51965
Township of Wellesley
21532
Total shareholder debt
$ 1103254
Note (a) Effective August 1, 2000, KWHI incurred unsecured promissory notes payable to the
Corporation of the City of Kitchener and the Corporation of the Township of Wilmot, which
have an interest rate of 3.23% per annum. Interest is payable in quarterly installments,
in arrears, on March 31, June 30, September 30, and December 31. On September 1,
2022, these notes payable were re -issued at the same amount and rates under Enova
Energy Corporation
Note (b) The former WNHC held senior and junior long-term notes payable with its legacy
shareholders. The notes were amalgamated and replaced with a single note for each
shareholder as of September 1, 2022 with the same terms, including interest rate
payable, as the notes to the City of Kitchener and the Township of Wilmot.
Page 173 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
12. Employee Future Benefits
The Corporation pays certain medical and life insurance benefits on behalf of some of its retired
employees. These benefits are provided through group -defined benefit plans. There are two
defined benefit plans for the retirees of the legacy companies. A full actuarial valuation of the plans
was performed as at December 31, 2022. The Corporation recognizes these post-retirement costs
in the period in which employees' services were rendered. The accrued benefit liability at December
31, 2022 is $7,703 and includes both legacy plans.
Changes in the present value of the aggregate defined benefit unfunded obligation and the
aggregate accrued benefit liability are as follows:
2022
Accrued benefit obligation
Balance, beginning of period
$ 10,637
Current service cost
134
Interest cost
130
Benefits Paid
(189)
Actuarial gains recognized in other
comprehensive income
(3, 009)
Accrued benefit liability, end of period
$ 77703
Components of net benefit expense recognized are a
follows:
2022
Current service cost $ 134
Interest cost 130
Net benefit expense recognized $ 264
Actuarial losses recognized in other comprehensive
income
2022
Cumulative amount at September 1 $ (620)
Recognized during the period (net of tax) 23211
Net benefit expense recognized $ 11591
Page 174 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
12. Employee Future Benefits (continued)
The significant actuarial assumptions used
in the valuation are as follows (weighted
2022
General inflation:
Changes in the Consumer Price Index 3.00%
Accrued obligation:
Discount rate 5.05%
Salary increases 4.00%
Benefit cost for the period: Arc ee
Withdrawal rate 18-29
2.75%
30-34
2.20%
35-39
1.65%
40-49
1.40%
50-54
1.20%
Assumed health care cost trend rates:
Initial health care cost trend rate Health 4.70%
Dental 4.90%
The approximate effect on the accrued benefit obligation of the entire plan and the estimated net
benefit expense of the entire plan if the health care trend rate assumption was increased or
decreased by 1 %, and all other assumptions were held constant, is as follows:
1% increase in trend rate
1% decrease in trend rate
2022
$ 375
(320)
Page 175 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
13. Customer Deposits and IESO Deposits
Customer deposits represent cash deposits from electricity distribution customers and retailers, as
well as construction deposits.
Deposits from electricity distribution customers are refundable to customers who demonstrate an
acceptable level of credit risk as determined by the Corporation under policies set out by the OEB
or upon termination of their electricity distribution service.
Construction deposits represent cash prepayments for the estimated cost of capital projects
recoverable from customers and developers. Upon completion of the capital project, these deposits
are transferred to deferred revenue.
Customer deposits comprise:
2022
Current
Customer deposits $ 11731
Contruction deposits 10,150
Performance bond 200
$ 12,081
Long-term
ESO deposit for energy conservation programs 15158
Customer deposits - long-term 77476
$ 81634.
Page 176 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
14. Share Capital
Authorized
Unlimited Common shares
Unlimited Class A special shares
Unlimited Class B special shares
Issued
100,000 Common shares $ 326,248
10,000 Class A special shares -
10, 000 Class B common shares
120,000 Total Shares $ 3269248
Common shares are issued as follows:
• 53,390 are issued to the Corporation of the City of Kitchener
• 30,830 shares are issued to the Corporation of the City of Waterloo
• 8,510 shares are issued to the Corporation of the Township of Woolwich
• 4,490 shares are issued to the Corporation of the Township of Wilmot
• 2,780 shares are issued to the Corporation of the Township of Wellesley
Class A special shares are issued as follows:
• 9,225 shares are issued to the Corporation of the City of Kitchener
• 775 shares are issued to the Corporation of the Township of Wilmot
Class B special shares are issued as follows:
• 7,320 shares are issued to the Corporation of the City of Waterloo
• 2,020 shares are issued to the Corporation of the Township of Woolwich
• 660 shares are issued to the Corporation of the Township of Wellesley
Special shares were issued as part of the Amalgamation Transaction on September 1, 2022 to effect
post -closing adjustments provided for in corresponding agreements. As of December 31, 2022, the
redemption value has not been set.
Dividends
The holders of the common shares are entitled to receive dividends as declared from time to time.
No dividends were declared or paid during the period. The Corporation has $5,056 in dividends
payable carried forward from prior periods.
Page 177 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
15. Revenue
2022
Revenue from contracts with customers $ 145,149
Other revenue
Specific service charges 843
Deferred revenue 730
Scrap sales 100
Net gain on disposal of capital assets 37
Non -Utility operations 338
Retailer services 13
Sundry 206
Net realized gain on derivatives 287
Total other revenue $ 27554
Total revenues $ 147,703
In the following table, revenue from contracts with customers is disaggregated by type of customer.
2022
Residential $ 58,419
Commercial 80,470
Large users 37898
Other 27362
$ 145,149
Page 178 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
16. Interest Income and Expense
17. Lease Liabilities
The Corporation has entered into a lease agreement for solar PV roof -top equipment representing
right -of -use assets (note 6). The right -of -use assets are recognized at the present value of the
minimum lease payments, plus any extensions estimated to be exercised, with the corresponding
equivalent lease liability recognized. The Corporation has determined the lease terms based on all
available information as at the reporting date.
Maturitv analysis - contractual undiscounted cash flows 2022
Less than one year $ 97
One - five years 490
More than five years 570
Total undiscounted lease liabilities at period end $ 11157
Interest included on the liabilities included in the
statement of financial position at December 31, 2022 (282)
Lease Liabilities - current $ 97
Lease Liabilities - non-current $ 778
Page 179 of 264
2022
Interest income on bank deposits
$ (183)
$ (183)
Interest on shareholder debt
13188
Interest expense on long term debt
11677
Interest expense on short tem debt
27
nterest expense on BMO letter of credit
51
Interest expense on deposits
130
Interest expense on capital lease
12
$3,085
Net interest cost
$ 2,902
17. Lease Liabilities
The Corporation has entered into a lease agreement for solar PV roof -top equipment representing
right -of -use assets (note 6). The right -of -use assets are recognized at the present value of the
minimum lease payments, plus any extensions estimated to be exercised, with the corresponding
equivalent lease liability recognized. The Corporation has determined the lease terms based on all
available information as at the reporting date.
Maturitv analysis - contractual undiscounted cash flows 2022
Less than one year $ 97
One - five years 490
More than five years 570
Total undiscounted lease liabilities at period end $ 11157
Interest included on the liabilities included in the
statement of financial position at December 31, 2022 (282)
Lease Liabilities - current $ 97
Lease Liabilities - non-current $ 778
Page 179 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
18. Commitments and Contingencies
General
From time to time, the Corporation is involved in various litigation matters arising in the ordinary
course of its business. The Corporation has no reason to believe that the disposition of any such
current matter could reasonably be expected to have a materially adverse impact on the
Corporation's financial position, results of operations, or ability to carry on any of its business
activities.
General Liability Insurance
The Corporation is a member of the Municipal Electric Association Reciprocal Insurance Exchange
("MEARIE"). MEARIE is a pooling of public liability insurance risks of many of the LDCs in Ontario.
All members of the pool are subjected to assessment for losses experienced by the pool for the
periods in which they were members, on a pro -rata basis based on the total of their respective service
revenues. As at December 31, 2022, no assessments have been made.
19. Guarantees
Guarantees do not apply to the Corporation.
20. Pension Agreement
The Corporation provides a pension plan for its employees through OMERS. The plan is a multi-
employer, contributory defined pension plan with equal contributions by the employer and its
employees. From September 1, 2022 to December 31, 2022, the Corporation made employer
contributions of $969 to OMERS. The Corporation's net benefit expense has been allocated as
follows:
(a) $291 capitalized as part of labour in PP&E and
(b) $678 recorded as an expense against net income.
21. Employee Benefits
2022
Salary, wages and benefits $ 11,399
CPP and EI remittances 142
Contributions to OMERS 969
Expenses related to employee future
benefits 264
$ 121774
Page 180 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
22. Related Party Transactions
(a) Parent and ultimate controlling party
The Corporation is wholly owned by the Cities of Kitchener and Waterloo, and the Townships of
Wilmot, Wellesley and Woolwich. The Cities and the Townships produce financial statements that
are available for public use.
(b) Entity with significant influence
The Cities of Kitchener and Waterloo control and exercise significant influence over the Corporation
through their indirect ownership interest in the Corporation of 53.4% and 30.8% respectively.
(c) Key management personnel
The key management personnel of the Corporation have been defined as members of its Board of
Directors and executive management team members, and are summarized below:
2022
D i rectors' fees $ 70
Executive compensation and benefits 683
$ 753
(d) Transactions with entities with significant influence
In the ordinary course of business, the Corporation may issue dividends to the shareholders.
(e) Transactions with ultimate shareholders (the Cities and Townships)
In 2022 the Corporation had the following significant transactions with its ultimate shareholders, all
of which are government entities:
The Corporation delivers electricity to the Cities of Kitchener and Waterloo and the Townships of
Wellesley, Wilmot and Woolwich and its related organizations throughout the period for their
electricity needs. Electricity delivery charges are at prices and under terms approved by the OEB.
The Corporation also provides the following services to the Cities of Kitchener and Waterloo and the
Townships of Wellesley, Wilmot and Woolwich:
• streetlight maintenance services
• streetlight construction services
For the City of Kitchener and the Township of Wilmot, these services are contracted through
Kitchener Energy Services Inc. The Corporation conducted transactions with related parties during
the period ended December 31, 2022. These transactions are in the normal course of operations
and are measured at fair value.
Page 181 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
23. Financial Instruments and Risk Management
Fair value disclosure
Cash and cash equivalents are measured at fair value. The carrying value of receivables, unbilled
energy receivable, accounts payable, and accrued charges approximate fair value due to the short
maturity of these instruments. The carrying value of the customer deposits approximates fair value
since the amounts are payable on demand.
The Corporation's activities provide for a variety of risks, particularly credit risk, market risk, and
liquidity risk.
The fair value of the long-term debt approximates its carrying value due to the short maturity and/or
the variable interest rates.
Financial risks
The Corporation understands the risks inherent in its business and defines them broadly as anything
that could impact its ability to achieve its strategic objectives. The Corporation's exposure to a variety
of risks such as credit risk, interest rate risk and liquidity risk, as well as related mitigation strategies,
are discussed below.
(a) Credit risk
Financial assets carry credit risk that a counterparty will fail to discharge an obligation which
could result in a financial loss. Financial assets held by the Corporation, such as accounts
receivable, expose it to credit risk. The Corporation earns its revenue from a broad base of
customers located in the Cities of Kitchener and Waterloo, and the Townships of Wellesley,
Wilmot and Woolwich. No single customer accounts for a balance over 3.26% of total accounts
receivable.
The carrying amount of accounts receivable is reduced through the use of an allowance for
impairment and the amount of the related impairment loss is recognized in net income.
Subsequent recoveries of receivables previously provisioned are credited to net income. The
balance of the allowance for expected credit losses at December 31, 2022 is $800.
The Corporation's credit risk associated with accounts receivable is primarily related to payments
from distribution customers. At December 31, 2022, approximately $1,627 is considered 60 days
past due. The Corporation has over 157,000 customers, the majority of whom are residential.
Credit risk is managed through collection of security deposits from customers under directions
provided by the OEB. As at December 31, 2022, the Corporation holds security deposits in the
amount of $9,206.
Page 182 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
23. Financial Instruments and Risk Management (continued)
(b) Market risk
Market risks primarily refer to the risk of loss resulting from changes in commodity prices, foreign
exchange rates, and interest rates. The Corporation currently does not have any material
commodity or foreign exchange risk. The Corporation is exposed to fluctuations in interest rates
as the regulated rate of return for the Corporation's distribution business is derived using a
complex formulaic approach which is in part based on the forecast for long-term Government of
Canada bond yields. The Corporation's long-term debt as of December 31, 2022 is at a variable
interest rate.
(c) Liquidity risk
The Corporation monitors its liquidity risk to ensure access to sufficient funds to meet
operational and investing requirements. The Corporation's objective is to ensure that sufficient
liquidity is on hand to meet obligations as they fall due while minimizing interest exposure. The
Corporation has access to a $45M credit facility and monitors cash balances daily to ensure that
a sufficient level of liquidity is on hand to meet financial commitments as they come due. As at
December 31, 2022, $nil had been drawn under BMO's $45M operating credit facility.
In 2022 the Corporation was assigned an Issuer Rate of A, Stable, from DBRS Limited. The
Corporation's financial risk profile is reasonable with key metrics supporting the "A" rating.
The Corporation also has a bilateral facility for $35,000 (the "LC" facility) to issue letters of credit
mainly to support the prudential requirements of the IESO of which the $35,000 has been drawn
and posted with the I ESO.
The majority of accounts payable, as reported on the balance sheet, are due within 30 days.
(d) Capital disclosures
The main objectives of the Corporation, when managing capital, are to ensure ongoing access
to funding to maintain and improve the electricity distribution system, compliance with covenants
related to its credit facilities, prudent management of its capital structure with regard for
recoveries of financing charges permitted by the OEB on its regulated electricity distribution
business, and to deliver the appropriate financial returns.
The Corporation's definition of capital includes shareholder's equity and long-term debt. As at
December 31, 2022, shareholder's equity amounts to $443,304 and long-term debt including
shareholder debt amounts to $227,852.
Page 183 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
24. Changes in Accounting Policies
The International Accounting Standards Board (IASB) has issued the following Standards,
Interpretations and Amendments to Standards that were adopted by the Corporation effective
January 1, 2022:
i. Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16)
ii. Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)
iii. Annual Improvements to IFRS Standards 2018-2020
iv. Reference to the Conceptual Framework (Amendments to IFRS 3)
The amendments and clarifications did not have an impact on the financial statements.
25. Future Changes in Accounting Policy and Disclosures
At the date of authorization of these financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and Interpretations have been published by the
IASB. None of these Standards or amendments to existing Standards have been adopted early by
The Corporation and it is still to be determined if any will have a material impact on the Corporation's
financial statements.
i. Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction - Amendments
to IAS 12 Income Taxes
On May 7, 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12). The amendments narrow the scope of the initial
recognition exemption so that it does not apply to transactions that give rise to equal and
offsetting temporary differences. As a result, companies will need to recognize a deferred tax
asset and a deferred tax liability for temporary differences arising on initial recognition of a lease
and a decommissioning provision. The amendments are effective for annual periods beginning
on or after January 1, 2023. Earlier adoption is permitted.
ii. Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
On February 12, 2021, the IASB issued amendments to IAS 1 Presentation of Financial
Statements and an update to I FRS Practice Statement 2 Making Materiality Judgements to help
companies provide useful accounting policy disclosures. The key amendments to IAS 1 include
a requirement for companies to disclose their material accounting policies rather than their
transactions, other events or conditions are themselves immaterial and as such need not be
disclosed; and clarifying that not all accounting policies that relate to material transactions, other
events or conditions are themselves material to a company's financial statements. The
amendments are effective for annual periods beginning on or after January 1, 2023. Earlier
adoption is permitted.
Page 184 of 264
ENOVA ENERGY CORPORATION
Notes to Consolidated Financial Statements
For the period September 1, 2022 to December 31, 2022
(Expressed in thousands of dollars)
25. Future Changes in Accounting Policy and Disclosures (continued)
iii. Definition of Accounting Estimate (Amendments to IAS 8)
On February 12, 2021, the IASB issued Definition of Accounting Estimates (Amendments to
IAS8). The amendments introduce a new definition for accounting estimates, clarifying that they
are monetary amounts in financial statements that are subject to measurement uncertainty. The
amendments also clarify the relationship between accounting policies and accounting estimates
by specifying that a company develops an accounting estimate to achieve the objective set out
by an accounting policy. The amendments are effective for annual periods beginning on or after
January 1, 2023. Earlier adoption is permitted.
Page 185 of 264
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Staff Report
Chief Administrator's Office
REPORT TO: Audit Committee
DATE OF MEETING: June 26, 2023
SUBMITTED BY: Corina Tasker, Internal Auditor, 519-741-2200 ext. 7361
PREPARED BY: Corina Tasker, Internal Auditor, 519-741-2200 ext. 7361
WARD(S) INVOLVED: All
DATE OF REPORT: June 15, 2023
REPORT NO.: CAO -2023-284
SUBJECT: 2nd Quarter Audit Status Report
RECOMMENDATION:
For information.
www. i tc en er. ca
REPORT HIGHLIGHTS:
• The purpose of this report is to provide information regarding recent audits.
• There are two audits included in this report: 1) Petty Cash and Floats; and 2) Facility
Bookings and Risk Assessment Program Review.
• Results of the audits were positive, with no fraud detected. However, opportunities for
improvement have been identified.
• There are no financial implications.
• Community engagement included this report posted to the city's website with the agenda in
advance of the council / committee meeting.
• This report supports the delivery of core services.
EXECUTIVE SUMMARY:
The following report provides a summary of the Internal Audit assurance and consulting services
completed during the period of April to June 2023. The table below shows the audits contained
in this report.
Assurance work is in progress on the following topics:
• Accounting controls
Consulting work is in progress on the following reviews:
• Training Documentation - process review
The results of the petty cash and float controls audit show that cash floats are generally well
protected by being stored in safes or point of sale machines. Throughout the pandemic there
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 238 of 264
was a lot of staff turnover with limited cross -training provided on proper reconciliation
procedures which led to some areas with incorrect (over or short) float balances. However,
staff are now all aware of the proper procedures and will endeavor to ensure cash is reconciled
regularly. The implementation of SAP Concur has greatly decreased this risk as petty cash is
only used in a few instances. With the exception of a large discrepancy in the Parking float, all
other variances were very small and there are no suspicions of theft. The Parking float
shortage is likely due to funds located in the parking machines, which will be reconciled as the
new parking system is implemented.
In June 2022 a new online facility booking inquiry form and risk assessment process were
launched. The original intent of implementing this process was to facilitate an automated risk
assessment process to ensure no stakeholders were left out of the process, and that input
could be sought earlier in the booking process in order to mitigate safety and financial risk to
the corporation.The results of the facility booking and risk assessment program review indicate
that the new online inquiry form and risk assessment process for events at City facilities have
generally had a neutral to positive impact on staff and customers, however, more can be done
to fine-tune the program to be even more effective. Moving the facility booking process online
through the form and webpage information is a positive and required step for customer
satisfaction in today's digital environment. However, improvements can be made to the
original solution to streamline the process and provide a better customer experience. The risk
assessment process requires some analysis to refine which groups truly need to be involved to
mitigate risk. This first iteration of a solution to solve the problem identified by Public Safety
Canada stands as a solid foundation to build upon with further continuous improvement.
BACKGROUND:
The overarching goal of internal audit is to protect the City's assets and interests. This
includes, but is not limited to, protecting the long-term health of the organization, its financial
and physical assets, its reputation, its ability to perform critical services and the safety and
well-being of employees and citizens.
Internal Audit provides assurance and consulting services in accordance with the International
Standards for the Professional Practice of Internal Auditing (Standards), IIA 2012. These
services are independent, objective activity designed to add value and improve an
organization's operations. It helps an organization accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes.
• Assurance services provide an objective assessment of evidence to provide an
independent opinion or conclusions regarding an entity, operation, function, process,
system, or other subject matter.
• Consulting services are advisory in nature and are generally performed at the specific
request of an engagement client. When performing consulting services, the internal
auditor should maintain objectivity and not assume management responsibility.
Audit topics are selected independently by the Internal Auditor and approved by Audit Committee
on an annual basis. Audit results are brought back to Audit Committee in reports such as this on
a quarterly basis as completed.
Page 239 of 264
REPORT:
1. Petty Cash and Floats — Controls Audit
Completed: June 12, 2023
Background:
Employees are empowered to purchase goods and services on behalf of the City of Kitchener
to perform their jobs. For purchases <$3000 they can do so through using a corporate VISA
card if they have one, or by using their own funds and being reimbursed through SAP Concur.
In rare cases, employees without access to SAP are able to use petty cash (for <$100). Prior
to the implementation of SAP Concur in 2020, payments were made through cheque
requisition.
With the implementation of SAP Concur for employee expenses in 2020, most locations no
longer have a need to have a petty cash float as all staff who have an employee email account
must use Concur to be reimbursed. Most areas still retain a change float for their point of sale
(POS) machines which are topped up from sales prior to making revenue deposits, with any
over or under variances being noted on the deposit.
Throughout the pandemic there was a lot of staff turnover with limited cross -training provided
on proper procedures. Reports of theft or missing funds increased, and it was found that
controls were lacking in some areas.
Audit Objectives:
The objective of this review is to physically confirm that petty cash and float balances are
correct and that the cash is adequately protected from theft. A secondary objective is to test
any petty cash vouchers and associated backup / receipts to ensure compliance with policy.
Scope and Methodology:
This audit included the following activities:
• Unannounced physical count of petty cash and float balances for twenty-nine locations
• Review of safe procedures and controls
• Testing vouchers and backup (if any) against the following criteria:
o Voucher was authorized by the appropriate person, and the custodian and
person receiving the cash signed in the appropriate spot on the voucher
o Business reason for the expense was provided
o No alcohol or tobacco was purchased
o No personal items / loans / cashing of personal cheques
o Original receipts attached
Findings:
Petty Cash
There are only four petty cash floats remaining at City locations. They are used for the
following reasons:
Page 240 of 264
• KOF — to reimburse staff for doctor's notes for those outside staff without a City email
address
• Parking — 5t" floor City Hall — to provide refunds for transponder deposits; note that this
will no longer be required when the new parking system is installed which does not
require a transponder nor a deposit
• Market — to purchase program supplies (groceries) from market vendors that only
accept cash, and to reimburse vendors for market dollar vouchers
• The Aud — to reimburse expenses for temporary or part-time event staff without a City
email address
There were no issues with the KOF and Aud petty cash floats. Both were properly secured
and balanced to the correct total. The Market and Parking petty cash floats had more cash
than expected. It is expected that these floats will be balanced the next time they are topped
up.
Two of the Parking petty cash vouchers did not have receipts, none had an authorized
signature, and the balance had not been reconciled in several months. Staff were instructed to
ensure it is now balanced monthly going forward and that all vouchers have receipts attached.
As noted above, this will no longer be required when the new parking system is implemented.
Floats
There are thirty-one change floats across twenty-six locations. All floats were locked in a safe
or POS machine with the exception of one float which was left in an unlocked drawer. Twenty-
one floats balanced, four were short money and six had excess money.
Except for two parking floats, the other discrepancies were small dollars. The parking floats
were short by a total of $14,694.88. While staff were regularly counting the floats and recording
the denominations, they were unaware that this should balance to a particular number and
were thus not indicating any over / short in their deposits. In addition, it is suspected that a
substantial portion of the shortage is within the parking machines and may balance. There is
evidence from previous audits that this is the case.
Once the implementation of the new parking system is complete, staff will work to determine
how much float is in the machines and develop a process to reconcile to the float total on a
regular basis, monthly at a minimum. Staff will report back to the Auditor in July when that has
been completed.
There were various changes to the float custodians, approvers and amounts noted and shared
with Finance staff. Three floats were also deemed to no longer be required and will be
returned to Finance.
Actions:
The following actions have been or will be taken to address issues noted above:
• Accounting has been informed to make all required custodian, approver, and amount
updates to their main list.
Page 241 of 264
• Accounting will ensure the three floats that are no longer needed are deposited
properly.
• Procedures have been changed to ensure all floats are secured at all times.
• Parking will work to reconcile their floats and petty cash and establish a monthly
reconciliation process going forward.
Conclusion:
The results of this audit show that cash floats are generally well protected. There were no
large discrepancies (except for Parking) or suspicions of theft. Throughout the pandemic there
was a lot of staff turnover with limited cross -training provided on proper procedures. However,
staff are now all aware of the proper procedures and will endeavor to ensure cash is reconciled
regularly. The implementation of SAP Concur has greatly decreased this risk as petty cash is
only used in a few instances.
This audit will continue to be part of the rotating list of standard controls and compliance
audits.
2. Facility Booking and Risk Assessment — Program Review
Completed: June 85 2023
Background
In June 2022 a new online facility booking inquiry form and risk assessment process were
launched. The original intent of implementing this process was to facilitate an automated risk
assessment process to ensure no stakeholders were left out of the process, and that input
could be sought earlier in the booking process in order to mitigate safety and financial risk to
the corporation.
At the time Council requested a follow-up report at the end of the year. After six months of use
staff and customers were surveyed to determine the effectiveness and impact of the new
process and tools and identify further areas for improvement. In addition, program data was
collected and analyzed. The following is a summary of the responses, data, and related
recommendations which have been shared with staff responsible for the process.
Review Objectives
The overall goal of this review is to assess the effectiveness and impact of the new facility
booking and risk assessment process and to identify further areas for improvement.
Scope
The following areas are within scope for this review:
• Staff and customer feedback related to the new process and tools after approximately 6
months of use
• Recommendations for further improvements
The following is out of scope:
• Implementation of recommendations
Page 242 of 264
Methodology
The following activities were completed as part of this review:
• Survey of internal facility host staff
• Survey of internal risk assessors
• Survey of technical support staff
• Customer experience surveys for customers using the online inquiry form between
January 19 and February 16, 2023
• Review of booking data to date
Findings
Booking Data and Volumes
Since inception in June 2022 until March 2023, there have been 2184 facility booking inquiry
forms submitted. Of those 48% or 1055 have not resulted in a booking. The remaining 52% or
1129 were in various stages of completion, while 415 events were booked or completed. In
terms of type of events and preferred venues, the majority of inquiries are for birthday parties
at community centres.
Council was specifically interested in knowing how many Indigenous events were booked and
had received the new fee waiver. The data showed that there were two Indigenous events
booked through the new form, one of which is complete, and one is in progress. There were
also six ongoing Indigenous groups with seventy-five individual bookings which were set up
prior to the inquiry form implementation. The total fee waiver of all Indigenous bookings in
2022 was $18,908.
Risk Assessment Analysis
Data from the risk assessment tool was analyzed to determine the effectiveness of the
process. There have been 474 events that were directed to one or more risk assessors (City
staff in various roles), depending on the attributes of the event, resulting in 949 risk
assessment requests in total.
Risk assessors have the ability to mark the assessment as complete or indicate that it is not
applicable, meaning it may have been sent to them in error and system adjustments may be
required. Comments should be input for either response and they are required to respond
within two business days. If the inquiry form is cancelled by the event host prior to completion,
then the status will change to cancelled. A blank status indicates that the risk assessor took
no action.
The data shows that only 14% of total assessments were completed, while 44% had no
response. This may be because the majority of risk assessment requests are directed to
Custodial, and Parks & Cemeteries staff, in order to schedule staff to clean the area before or
after the event, and don't require a risk assessment. There is an opportunity to streamline the
process further to notify these staff in some other manner rather than involving them in the risk
assessment process.
Page 243 of 264
A review of the comments provided by staff risk assessors shows 31 % had comments. Of
those comments, a small amount provided instructions or required actions to be taken. The
rest of the comments simply indicated that no action was required, which is also a helpful
confirmation to the event host. There may be opportunities to streamline to eliminate some of
these requests if they truly are not required though.
The time from receipt of the risk assessment request until submission of the comment was
also calculated based on time stamps on the records. The average response time was 1.5
days.
Event Hosts
The majority of staff feel the online intake form is an improvement, mainly because it collects
most of the required information all in one spot, which decreases much of the time going back
and forth with the customer to gather the information. There were several recommendations for
improvements to the form which included the addition of fields to gather more information,
formatting changes, and better instructions. CSD Administration staff should consider these
suggestions and work with staff to update the form where feasible.
Adding facility booking information to the City website has been only moderately successful in
decreasing inquiries regarding pricing and room capacities. The largest problem seems to be
confusion around costs in addition to the hourly room rental price. Revised wording should be
considered as well as adding pictures of all rooms and the ability to see room availability.
The website information has driven more bookings in some areas. For example, inquiries and
confirmed bookings for the Williamsburg Dedication Centre has increased since
implementation of the website.
47% of facility hosts feel that risk assessors are not responding in a timely manner, causing
staff to either wait, spend time following up, or putting the corporation at risk by not waiting for
the risk assessment. As noted above, the data shows that the average response time is 1.5
days, however. This process should be revisited with the risk assessor group to see what is
impeding the assessors who are taking more than the 2 -day limit and which risk assessments
are truly needed. However, the majority of event hosts do find the comments provided by risk
assessors to be helpful.
About half of the staff feel that this new process has both decreased lead time for the customer
and decreased the amount of staff time spent on rentals. However, there is an equal amount
who feel this is more cumbersome and time consuming. Improvements to the process are
required to streamline the staff processing time while still providing the required data to the risk
assessors.
Risk Assessors
Most risk assessors indicated they are able to complete their assessments very quickly, which
is supported by the data. There does not appear to be as much benefit to the risk assessors as
was originally intended. Although it does automate the process and ensure all risk assessors
are in the loop, several have not received any requests yet, and the majority of requests are
low risk, resulting in no feedback from the risk assessors.
Page 244 of 264
Technical Support Staff Feedback
Staff who support the use of the inquiry form, webpage, and risk assessment tool felt that
having a single form for all facility types was beneficial for the customer and that the risk
assessment tool was simple to maintain. They noted, however, that the online form is
becoming prohibitively difficult to maintain due to its complexity and have recommended
alternative software to explore for future iterations of this program.
Customer Feedback
Customer feedback was gathered through the Customer Satisfaction Program from January 19
— February 16, 2023. After submitting the online inquiry form customers were prompted to fill
out a separate survey about their facility booking experience. 76% of customers felt the form
was easy or very easy to fill out. 77% of repeat customers found the form easier than the
previous process of phoning or emailing their preferred venue(s). Overall, 73% were satisfied
or very satisfied with the process. Areas for improvement include faster response times by
staff, showing pictures of venues and current availability on the webpage, and clarifying how to
book ice time.
Recommendations
The results of this review indicate that the process and tools have generally had a neutral to
positive impact on staff and customers, however, more can be done to fine-tune the program
to be even more effective. The online form is a positive change from the previous process
from both staff and customer perspectives and could be modified further to be more effective.
The web page has not had as much impact as hoped but could be improved by adding more
information including venue availability. The risk assessment process is seen as time
consuming but does provide some benefit in automatically including all the relevant
stakeholders
It is recommended that the CSD Manager, Service Coordination and Improvement complete
the following:
• Consider the suggestions for improvement to the website to ensure the information for
the public is as clear as possible.
• Consider the suggestions for improvement to streamline the form and make it easier to
fill out for customers.
• Meet with risk assessors to determine if there are some which can be removed from the
workflow if this is not providing value.
• Review the criteria for sending the risk assessments to each risk assessor to determine
if changes are required.
• Meet with event hosts to review their concerns and how/ if they will be addressed.
Brainstorm ideas for possible exemptions from the risk assessment process, i.e., are
there types of events which are low risk and could be removed from the workflow such
as birthday parties at community centres.
• Explore with Technology Innovation and Services (TIS) staff / Activenet staff the
possibility of adding a calendar with available times to the website. (This was explored
previously but was not possible at the time but may be viable now).
• Work with TIS staff to explore alternative software for housing the form and data
(Dataverse /Power Platform), including requesting budget to support this.
Page 245 of 264
Conclusion
Moving the facility booking process online through the form and webpage information is a
positive and required step for customer satisfaction in today's digital environment. However,
improvements can be made to the original solution to streamline the process and provide a
better customer experience. The risk assessment process requires some analysis to fine tune
which groups truly need to be involved to mitigate risk. This first iteration of a solution to solve
the problem identified by Public Safety Canada stands as a solid foundation to build upon with
further continuous improvement.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget — The recommendation has no impact on the Capital Budget.
Operating Budget — The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
• CAO -2022-494 2023 Internal Audit Work Plan
APPROVED BY: Dan Chapman, CAO
ATTACHMENTS:
None
Page 246 of 264
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