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Explanation of Statement of Operations - Quarter 2 Financial Update (2016)

The statements of operations provided in the preceding pages summarize the Niagara Region's financial operating activity as of June 30, 2016. These statements have been compiled by Corporate Services and the departments have validated the information and provided commentary.

These statements present the net funding position of Niagara Region's operating budget and do not include Public Sector Accounting (PSA) adjustments for amortization, employee future benefits and landfill liability.

Approved and/or expected unbudgeted transfers to/from reserves can offset other variances and impact net surplus/deficit reported by departments. These statements do not include capital activity.

Certain assumptions and estimates are required to forecast results. The assumptions and estimates made have been done so with information available to management at the time of writing this quarterly financial update. Readers of these reports are cautioned that actual operating results may vary from the forecast information presented for 2016.

Report Columns

Year to Date Budget - the portion of the annual budget expected to be realized from January through June.

Year to Date Actual - actual costs incurred and revenues earned from January to June. Departments have accrued for goods or services received but not yet paid for and revenues earned but not yet received.

Year to Date Budget vs. Actual Variance Favourable/(Unfavourable) - the difference between the year to date budget and the year to date actual. An unfavourable variance (such as actual expenditures are greater than budgeted or actual revenues are less than budgeted) is shown as a negative and a favourable variance (i.e. actual expenditures are less than budgeted or actual revenues are greater than budgeted) is shown as a positive.

Annual Budget - the annual budget approved by council with budget adjustments as explained on the Budget Adjustment Summary.

Annual Forecast - the year to date actual plus the year to go forecast for July to December. It is intended to project expected organization results at the end of the current year based on information available at June 30, 2016. As noted, actual operating results may vary from the forecasted information presented.

Annual Budget vs. Forecast Variance Favourable/(Unfavourable) - the difference between the annual budget and the annual forecast. An unfavourable variance (i.e. forecasted expenditures are greater than budgeted or forecasted revenues are less than budgeted) is shown as a negative and a favourable variance (i.e. forecasted expenditures are less than budgeted or forecasted revenues are greater than budgeted) is shown as a positive.

Report Rows - Expenditures

Compensation - salaries, benefits and personnel related allowances (such as meals, clothing, training).

Administrative - costs for audit, advertising, consulting, insurance, contracted services, Court Services expenses, allowances (such as car, mileage), telephone, training and related expenses, office supplies, memberships and other miscellaneous expenses.

Operational & Supply - program specific costs including: chemical, medical, waste management supplies and purchased services.

Occupancy & Infrastructure - costs to repair or maintain property and infrastructure, property tax, leases and all utilities.

Equipment, Vehicles, Technology - costs to repair or maintain equipment and vehicles, minor equipment purchases, computer licenses and support.

Community Assistance - Ontario Works allowances and benefits program costs, rent supplements and the use of all housing related subsidies.

Financial Expenditures - interest charges, principal debt payments, tax write-offs, and bad debt expense. The debt related charges included in this section are allocated to departments though the chargeback/recovery process.

Partnership, Rebate, Exemption - grants paid to local area municipalities and other organizations to support projects within the region.

Report Rows - Revenues

Taxation - revenues received from area municipalities including payment-in-lieu, supplemental and power dams revenue; as well as funds received to support waste management, water and wastewater operations.

Federal & Provincial Grants - funds received from the provincial and federal governments.

By-law Charges & Sales - shared services revenue (without shared services agreement), licenses, permits and approvals, and fees and service charges on the User Fee By-Law such as child care fees, health fees, police fees (i.e. accident reports, etc), seniors homes fees (i.e. long term care accommodations fees), road fees and other miscellaneous fees (i.e. zoning).

Other Revenue - shared services revenue (with shared services agreement), investment income, Court Services revenue, recycling revenue, NRH revenue and other miscellaneous revenue.

Report Rows - Intercompany Charges

Intercompany Charges - direct rate-based costs that are allocated to the beneficial recipient by the department providing the service or goods and calculated based on a pre-established rate. The pre-established rate is intended to recover the costs incurred by the service provider (time and material).

Report Rows - Transfers

Transfer to Reserves - includes all transfers of funds in the current year from the operating program to a reserve. At a corporate level the net of the transfers to reserves and the transfers from reserves represents our total contribution to reserves or draw on reserves in the year.

Transfers from Reserves - transfers of funds in the current year to the operating program from a reserve. At a corporate level the net of the transfers from reserves and the transfers to reserves represents our total contribution to reserves or draw on reserves in the year.

Expense Allocations to Capital - eligible costs recorded and managed in the operating program allocated to the capital program.

Report Rows - Indirect Allocations & Debt

Indirect Allocation - costs that are not directly traceable to a specific program or department (i.e. HR, finance, legal, IT, properties, print shop and communications). Indirect costs are common resources shared by several programs and services that require an allocation to determine full cost of the program or service.

Capital Financial Allocation - allocations of all debt charges incurred to programs and services based on projects the debt is issued to fund.

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