BARRHEAD - The Town of Barrhead is in a "strong financial" position.
That is the conclusion Wayne Ellerington of Ellerington LLP came to while compiling his audit report for the 2022 budget year.
"Although, sometimes I wish the books were not in such good shape, for I would have something to report," he jokingly said.
The long-time auditor for the town was at the March 28 council meeting to present the findings of his audit of the 2022 financial statements, in which he gave the municipality an unqualified report.
Under the Municipal Government Act (MGA), municipalities must submit an annual financial audit to the province.
An unqualified report means the auditor did not find any issues with the financial records, and town staff tabulated them using standard accepted accounting practices.
Ellerington noted that the town's operational revenue for 2022 was up $508,000 from 2021, which represented roughly a four per cent increase, while expenditures increased by about $1 million, representing about a 7.8 per cent increase.
"But the increase was not something we were not expecting as this was the first year without COIVD restrictions, so recreation expenses were up 17 per cent," he said. "And that makes sense, as you were able to open the swimming pool and other recreation facilities and programs."
Other increases in expenditures Ellerington noted were a 16 per cent increase in the water system and a 13.7 per cent increase for the fire department. As for administration, legislative and council expenses, he said they were nearly identical from 2021.
In terms of cash assets, he said the municipality's cash flow was still "nice and healthy", even though the municipality spent $5.4 million on capital assets, which resulted in some cash reductions.
However, Ellerington added that those reductions were offset by deferred revenue in the form of unspent grant money from 2021, which was put towards 2022 capital projects.
"At the end of the year, you were sitting with unrestricted cash reserves of $5.8 million," he said. "What that gives you is the ability, if no money came in until taxes come in starting in June and July, that there is sufficient cash to operate."
Ellerington noted unrestricted cash reserves also directly impact the town's debt limits which the province regulates through the MGA.
Under the MGA, the town's debt limit is $19,842,396. Similarly, under the MGA, they are allowed maximum debt and interest payments of $3,307,066. Currently, in 2022, the municipality's total debt was $4,049,388.
The debt the municipality is carrying is due to the $5 million debenture it took out to aid in the construction cost of the Barrhead Regional Aquatics Centre.
"And hopefully, that drags out for a while because it is at 3.153 per cent interest, which is good because you don't want to have to renew at eight per cent," he said.
Ellerington added the other important trend to watch is the debt ratio.
The municipality's total assets increased to $77,471,071 from $76,395,276. On the liability side, he noted that they decreased by $2,310,229 over the past year, with the net result being an increase in the accumulated surplus of $3,386,024.
The town's working capital, or liquidity, decreased slightly by $98,397, an amount Ellerington characterized as a relatively minor amount to $7,973,831 in 2022.
"Which is considered to be very strong," he said.
Another indicator the province likes to look at, Ellerington said, is a municipality's net financial assets, which for 2022 were pegged at $3,506,737 even after the town's long-term debenture is taken into account, "which is again, very healthy."
An oddity in the financial audit that Ellerington wanted to point out was associated with Beaver Brook Estates, saying that due to a rule under the MGA, the book carrying value for the town's lots at Beaver Brook Estates is zero.
"And the value of the lots is significant because you have a readily available asset, with no commitment that you have to cover off," he said.
Coun. Rod Klumph described Ellerington's presentation as being "music to his ears."
"The numbers you are presenting and the trends we are seeing, it is like a symphony. And to have you as our auditor saying that we are in a strong position is like going to the dentist and having him say we have no cavities."
Ellerington responded by saying the town's strong financial position is the result of years of good fiscal management, largely by administration and staff, but also council decisions.
“All it takes is prudent, financial controls and a council willing to pay attention to what is going on," he said. “And you don’t always see that in municipalities, which is sad.”
Barry Kerton, TownandCountryToday.com
