After 2-year pause, Baddeck closer to getting financial statement
Village commission hiring an accounting firm for the work
The village commission in Baddeck, N.S., is hiring an accounting firm to provide residents with an accurate picture of the municipality's state of affairs after going two years without producing an audited financial statement.
Interim chief administrative officer Maris Freimanis said the commission will be asking MNP of Sydney to prepare a financial statement that can be presented at a public meeting in January or February.
Victoria County staff will also be involved, because they have the authority to write cheques and move money between the village's six bank accounts, he said.
The move comes a week after residents called for better financial information and rejected a village commission decision to dissolve and merge with Victoria County.
Mark Peck, associate deputy minister of municipal affairs, said the province has been working with the village to get its finances in order for more than a year.
Its last audited financial statement was filed in 2019.
'A serious situation,' says associate deputy minister
"This is a serious situation and what we're expecting as the province, we're expecting the commission to really rectify this current situation that they find themselves in," said Peck.
To qualify for grants and other money, the province requires municipalities to file audited financial statements annually.
Peck said provincial staff have worked closely with Baddeck commissioners over the last couple of years to try to get the village to straighten out its finances and doing so now might not be easy.
"The village has a lot of work to do to rectify the situation," he said.
The associate deputy minister said there is no hard deadline right now to have a financial statement filed.
Peck would not say if the province would take unilateral action to force the village's hand, but he said it's a good sign the commission is getting professional help.
Balancing the books
"They're going to see what they can do in terms of balancing the books and looking at the various funds, looking at the cash flow and we'll just see where they go," he said.
"They have to get their house in order. They have to get a set of financial statements filed. They have to figure out the due-tos and the due-froms from one account to another and to get the village back on track."
In its last financial statement, the village posted an accumulated surplus of approximately $9 million and had net assets of nearly $2 million.
Peck said that sounds good on paper, but it does not help the municipality pay its bills.
"That is not cash on hand," he said.
"There's cash included with that, but primarily what makes up the majority of that accumulated surplus is the value of the assets of the Village of Baddeck. It's not like it's in an account where you can withdraw that funding."
'It's really about revenue'
For example, Peck said, the village has a water utility, but it would be difficult to sell and convert into cash.
Even having a positive balance sheet does not necessarily mean the municipality can borrow money, said Peck.
Someone taking out a mortgage on their home to fund renovations has to have steady income to make payments on the debt, he said.
"It's really about revenue," Peck said. "It's not about the amount of the asset or the ability to liquidate. It's about own-source revenue."