The Town was presented with its audited financial statements last Monday during the regular meeting of Clarenville’s Council.
Mike Flemming and Richard Power from Belanger Clarke Follett McGettigan, Chartered Accountants, were on hand to discuss the document with the six councilors.
The Town’s debt has increase by almost $2 million since the previous budget — from $6.5 million in 2008 to $8.5 million in 2009.
Chairperson of Council’s Finance, Administration and Planning Committee John Pickett said that amount is justified.
“Granted, our debt has increased, but our debt only increased as a result of bringing much more work into the town,” said Pickett, adding things like the $15 million Events Centre and roadwork contributed to this amount. “It takes a lot of capital expenditures.”
The Town has also committed to an “aggressive repayment” schedule, where $4.9 million of the debt should be paid off over the next five years.
The principal payments required are $1,196, 662 in 2010; $965,122 in 2011; $934,816 in 2012; $902,944 in 2013; and $882,012 in 2014.
Pickett said by paying off the debt quickly will save the Town money in the long run.
“We’ve got a very aggressive repayment plan, simply because we’ve got a very good interest rate; meaning that we’re able to pay our loans in a fashion that we’ll be able to get a good return on our dollar,” he said. “The quicker we pay it back on our terms, the better.”
Although making additional payments is something the Town will look at in the future, said Pickett, extra money may go towards infrastructure.
“We’d have to look at that when the time comes,” he said.
New system
Clarenville is using a new system to audit their financial statements based on generally accepted accounting principles established by the Public Sector Accounting Board (PSAB) of the Canadian Institute of Chartered Accountants.
Unlike the old method, the PSAB system looks at the annual usage of capital assets or infrastructure.
In other words, the value of roadways, buildings, water systems and pipes in the ground are included in the Town’s assets.
“What PSAB does is provides in the financial statements a statement of tangible financial assets and a net book value basis. Meaning, the estimated value that’s left in those assets,” said Richard Power, accountant with Belanger, Clarke, Follett McGettigan, Chartered Accountants.
“That information was never presented in financial statements prior to this year.”
The PSAB system has been around for almost a decade.
The depreciated value of infrastructure is reflected in the financial statement.
Power said the new system was created to better show this depreciation based on usage.
“The reason that PSAB requires or mandates that in the new system is that decision makers, policy makers, at various levels of government — federal, provincial and municipal (levels) — can get a better sense of the state of infrastructure.
These numbers should be used as indicators that work may have to be done in the future, explained Power. As an example, he said if a road has depreciated in value by 60 per cent, it could be something the Town should look at upgrading.
It’s also another way for local government to justify funding.
“(Policy makers) have another facet, slice of information and perspective of the infrastructure,” said Power. “(The numbers) will substantiate proposals or representations to the provincial or federal governments (for funding).”
For more information or to get a copy of the budget, contact the Clarenville Town Hall at 466-7937.
mclarkson@thepacket.ca
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