City of Surrey 2019 Annual Financial Report

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS  CITY OF SURREY

For the year ended December 31, 2019 [tabular amounts in thousands of dollars]

GENERAL

The City of Surrey (the “City”) is incorporated under the Local Government Act of British Columbia. The City’s principal activities include the provision of local government services to residents of the incorporated area. These include administrative, protective, infrastructure, environmental, recreational, and utility services. 1. SIGNIFICANT ACCOUNTING POLICIES a) Basis of accounting These consolidated financial statements 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. b) Basis of consolidation The consolidated financial statements are comprised of the City’s funds, Surrey Public Library (the “Library”), Surrey City Development Corporation (“SCDC”), Surrey Homelessness and Housing Society (“SHHS”), and Innovation Boulevard (“IBC”). The Library, SHHS, and SCDC are fully consolidated as they are controlled by virtue of their Board being appointed by the City. IBC is consolidated based on the City’s 50% ownership. Inter-fund and inter-corporate transactions and balances have been eliminated. The following is a brief description of the various funds and entities: i) Operating Funds These funds include the General, Drainage, Parking, Roads & Traffic Safety, Sewer, Solid Waste, Surrey City Energy and Water Operating Funds as well as the Surrey Public Library. They are used to record the operating costs of the services provided by the City. ii) Capital Funds These funds include the General, Drainage, Parking, Roads & Traffic Safety, Sewer, Solid Waste, Surrey City Energy and Water Capital Funds and Surrey Public Library Capital. They are used to record the acquisition costs of tangible capital assets and any related debt outstanding. iii) Reserve Funds Under the Community Charter of British Columbia, City Council may, by by-law, establish reserve funds for specified purposes. Money in a reserve fund and interest earned thereon must be expended only for the purpose for which the fund was established. If the amount in a reserve fund is greater than required for the purposes for which it was established, City Council may transfer all or part of the amount to another reserve fund. iv) Surrey City Development Corporation The consolidated financial statements reflect the assets, liabilities, revenues and expenses of SCDC. SCDC has the following wholly owned subsidiaries and government partnerships, which are accounted for as follows:

i) Grove Limited Partnership and Grove (G.P.) Inc. - (50% owned and proportionately consolidated) ii) Surrey City Investment (Industrial) Corporation (“SCIIC”) - (100% owned and fully consolidated)

SCIIC has a 50% ownership in the Beedie SCDC (34A Ave) Limited Partnership (“Beedie LP”). Beedie LP meets the criteria of a government business partnership and is accounted for using the modified equity method. SCIIC has a 50% ownership in the Beedie SCDC (34A Ave) G.P. Ltd., the General Partner of Beedie LP. Beedie GP is a corporation and is accounted for using the modified equity method.

50