Municipal financial statements in Ontario

Annual financial statements
A municipality shall, for each fiscal year, prepare annual financial statements for the municipality in accordance with generally accepted accounting principles for local governments as recommended, from time to time, by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada.
Section 294.1 of the Municipal Act

Financial statements are end-of-year reports that look back on the outcome of a municipality’s financial activities and balances during the previous financial year. They provide a measure of a government’s performance in the achievement of its objectives as set out in the operating and capital budgets.

They are prepared on an accrual basis, meaning revenues and expenses are shown when a decision/purchase agreement is made, which isn’t necessarily when money changes hands.

They are prepared in accordance with generally accepted accounting principles (GAAP) as recommended by the CPA Canada – Public Sector Accounting Board (PSAB), must be in compliance with the Public Sector Accounting Standards for local municipalities and must be audited by a professional accountant.

Statements must include:

Statement of financial position (“balance sheet”) – long-term view of the municipality’s financial health
Statement of operations (“income statement”)
Statement of change in net debt
Statement of cash flow
Comparative figures from the prior year
Comparison of actual to budget results

Showing

Assets and liabilities
Net financial resources (called net debt)
Accumulated surplus or deficit
Tangible capital assets
Other non-financial assets

While budgets come out at the start of the fiscal year, financial statements come out at the end as an “aftermath” report.

The financial statements as well as operating budgets and capital budgets must be made public so that residents can see how council is allocating and spending funds.