2018 Annual Financial Report

REPORT FROMTHE GENERAL MANAGER, FINANCE

MAY 6, 2019 To Mayor Doug McCallum and Members of City Council It is my pleasure to submit the Annual Financial Report for the year ended December 31, 2018. The purpose of this report is to publish the Consolidated Financial Statements and the Auditor’s Report for the City of Surrey, pursuant to Section 167 of the Community Charter. The preparation of the consolidated financial statements is the responsibility of City Council and the management of the City of Surrey. The financial statements and related information have been prepared in accordance with Canadian Public Sector Accounting Standards as prescribed by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants of Canada (CPA Canada). Management is also responsible for ensuring that the City remains fiscally prudent and financially sustainable through the ongoing monitoring of all the City’s financial affairs. The City maintains a system of internal accounting controls designed to provide reasonable assurances for the safeguarding of assets and the reliability of financial records. In addition to the City of Surrey, the reporting entity comprises all organizations, boards and enterprises controlled by the City of Surrey. This includes the Surrey Public Library, the Surrey Homelessness and Housing Society and the Surrey City Development Corporation. The public accounting firm BDO Canada LLP, which was appointed by City Council as the external auditor, has given the City an unqualified audit opinion on the City’s Consolidated Financial Statements, stating that in their professional opinion, the Consolidated Financial Statements present fairly, in all material respects, the consolidated financial position of the City of Surrey as at December 31, 2018, including its consolidated results of operations, its changes in net consolidated financial assets, and its consolidated cash flows for the year then ended in accordance with Canadian Public Sector Accounting Standards.

FINANCIAL OVERVIEW

2018 in Review The City continued its investment in civic facilities in 2018 with construction advancing on multiple projects including the North Surrey Sport and Ice Complex and the Clayton Community Centre. The new North Surrey Sport and Ice Complex will create welcoming arenas with gathering spaces, venue opportunities to support large events, and build on Recreation Surrey’s mission to build healthy communities where all people can be active and engaged. Completion of the new North Surrey Sport & Ice Complex is estimated for summer 2019. While, the new community hub in Clayton will integrate arts, library, recreation, and outdoor spaces in a single facility. In addition, the new community hub will be designed to meet high performance energy standards that concentrates on a “fabric first” approach to buildings. Completion of the Clayton Community Centre is estimated for summer 2020. In the residential development sector, the slowing trend towards construction of multi-family dwellings continued in 2018. Overall, the City saw a reduction in the number of residential permits issued in 2018 compared to 2017. Although, the City Centre continues to attract large scale residential projects including low-rise and high-rise developments.

Financial Position

CONSOLIDATED STATEMENT OF FINANCIAL POSITION For the year ended December 31 (amounts in $ millions)

2017 Actual

2018 Actual

Change

Financial Assets

$ 1,028.3 $

83.3

$ 1,111.6

Liabilities

(1,005.3)

(43.5)

(1,048.8)

Net Financial Assets Tangible Capital Assets Inventories of Supplies Prepaid Expenses Non-Financial Assets Accumulated Surplus

23.0

39.8

62.8

8,635.8

346.8

8,982.6

0.9 4.4

(0.2) (0.2)

0.7 4.2

8,641.1

346.4

8,987.5

$ 8,664.1 $ 386.2

$ 9,050.3

The financial position is calculated as financial assets less liabilities and results in either a net financial asset or a net debt. A net financial asset position is an indicator of the funds available for future expenditures, and a net debt position is an indicator of funds required to pay for past expenditures. In 2018, the City’s financial position increased by $39.8 million resulting in a net financial asset position of $62.8 million.

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