Municipal Financial Statements

Municipal financial statements report on financial activities and balances. They help ensure accountability and transparency, and assist municipalities with long-term and strategic planning. Financial statements are an important tool for a municipal council and administration to use to report to the taxpayers on the municipal services provided with the resources at their disposal. Financial statements provide information on a municipality’s financial activities and balances for the period. Financial statements also provide information on a municipality’s financial position in terms of its assets and liabilities, its net financial resources (called net debt), accumulated surplus or deficit, and its tangible capital assets and other non-financial assets. Financial statements reflect the outcomes of activities that create revenue and incur expenses to determine whether the municipality operated in a surplus or a deficit for that period. Financial statements also provide a meaningful summary of the sources, allocation and consumption of municipal economic resources, how the activities of the period have affected the municipality’s net debt, how municipal activities were financed, and how cash requirements were met.

Town of Renfrew Annual Financial Reporting

Financial Statements

Financial statements are prepared by municipalities on an annual basis in accordance with Canadian standards established by the PSAB. They include:

  • comparative figures from the prior year
  • a comparison of actual to budget results

Municipal financial statements are prepared on an accrual basis recognizing revenues and expenses when they occur and not necessarily when they are paid. As such, they can provide insight on the cost of decisions that may not need to be funded until a future period.

Financial Information Return (FIR)

The Financial Information Return (FIR) is the main data collection tool used by the Ministry of Municipal Affairs and Housing to collect financial and statistical information on municipalities. Section 294(1) of the Municipal Act requires that each municipality will annually report on its financial affairs, accounts and transactions in the form of the Financial Information Return. You can view past Financial Information Return's across Ontario here

Reporting Requirements and Standards

The Municipal Act, 2001 (MA) requires that every Ontario municipality prepare annual audited financial statements. Each municipality provides a copy to Ministry of Municipal Affairs and Housing (MMAH), when the municipality submits its annual Financial Information Return (FIR) to the Ministry.

According to Chartered Professional Accountants (CPA) Canada, municipal financial statements must be prepared in accordance with generally accepted accounting principles for local governments as recommended by the CPA Canada - Public Sector Accounting Board (PSAB). There are similar requirements in the MA.

Publication requirements apply to audited municipal financial statements. As part of these requirements, the treasurer of each municipality may publish a copy of the financial statements, along with notes to the financial statements, the auditor’s report and tax rate information, in a newspaper having general circulation in the municipality, or similarly publish a notice stating the information is available to the public at no cost.

Requirements for municipal financial reporting are standardized across Canada and are set out in the Public Sector Accounting Handbook. Municipal financial statements are now prepared using the net financial assets (net debt) model and must include the reporting of tangible capital assets. This approach provides a more complete picture of a municipality’s financial condition.