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Financial Statements

 

Financial statements are used to report on the local government’s financial position and its financial performance. Financial reporting is a key source of the information elected officials use to make informed decisions about how to use their local government’s limited resources to best serve the interests of their citizens. It also provides accountability to taxpayers about local government finances and how the local government uses the resources taxpayers have entrust to them.

 

The consolidated financial statements include financial information for the local government and all of the services controlled by the local government, such as fire, utilities and library. Financial statements must include a statement of financial position, a statement of operations, a statement of changes in net debt and a statement of cash flow.  Additional information is provided in schedules and notes to the financial statements.

 

Section 167 of the Community Charter requires municipalities to prepare financial statements every fiscal year. Regional Districts are also required to prepare financial statements under Section 814(3) of the Local Government Act. The fiscal year for all local governments is the calendar year. It is the responsibility of the financial officer to prepare the statements in accordance with generally accepted accounting principles for local government, and they must be presented to council or the board for acceptance. 

 

In accordance with Division 2, Part 6 of the Community Charter the statements must be audited by a qualified auditor, who is an independent accountant authorized to be an auditor under section 205 of the Business Corporations Act. The auditor must report to council on the financial statements. 

 

The auditor provides an ‘audit opinion’ on the statements. The audit opinion is usually unqualified, which means the statements are presented in conformity with standards; however, the audit opinion may also be qualified, which means there is some issue the auditor has raised about how the statements were prepared. Lastly, the audit opinion could be adverse if there were serious issues the auditor determined in their review.

 

The statements must be submitted to the Inspector of Municipalities by May 15 each year. The statements also must form part of the annual municipal report and Statement of Financial Information (SOFI) report. The financial statements also form the basis of the annual financial reporting forms that are required by the Ministry.

 

The Ministry has prepared a set of model financial statements for the fictional City of Anywhere, which includes a full set of financial statements with notes and supplementary schedules. A Guide to Local Government Financial Statements is also available to provide explanations of the information contained in financial statements, and a set of questions and answers is included in the document.

 

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