2023 Annual Report I CITY OF CHILLIWACK CITY OF CHILLIWACK I 2023 Annual Report 108 109 CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2023 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements (continued) Year ended December 31, 2023 9. Financial instruments: The Corporation is exposed to market risks from its use of financial instruments. Management does not believe that the Corporation's financial instruments are exposed to significant credit risk or liquidity risk. Market risk is the risk that changes in market prices, such as interest rates, will affect the Corporation's income. The Corporation's cash and investments include amounts on deposit with financial institutions that earn interest at market rates. The Corporation manages its cash by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. Fluctuations in market rates of interest would not have a significant effect on the Corporation's cash and investments. The fair value of the Corporation's cash, accounts receivable, accounts payable and accrued liabilities and unearned revenue approximate their carrying amounts due to the relatively short periods to maturity of these items. The fair value of the investments and financing lease receivable approximate their carrying amounts based on their market based interest rates. There has been no change to the risk exposures outlined above from 2022. 10. Income taxes: The Corporation is exempt from income taxes under Section 149 of the Income Tax Act, Canada. 11. Contractual rights: The Corporation is entitled to the following receipts under grants and rental agreements over the next four years: 2024 $ 1,442,506 2025 1,442,506 2026 942,422 2027 650,000 2028 650,000 $ 5,127,434 10 CHILLIWACK ECONOMIC PARTNERS CORPORATION (CEPCO) NOTES TO FINANCIAL STATEMENTS Year Ended December 31, 2023 CHILLIWACK ECONOMIC PARTNERS CORPORATION Notes to Financial Statements (continued) Year ended December 31, 2023 12. Employee Future Benefits: The Corporation and its employees contribute to the Municipal Pension Plan (a jointly trusteed pension plan). The board of trustees, representing plan members and employers, is responsible for administering the plan, including investment of assets and administration of benefits. The plan is a multi-employer defined benefit pension plan. Basic pension benefits are based on a formula. As of December 31, 2022, the Municipal Pension Plan has about 240,000 active members and approximately 124,000 retired members. Active members include approximately 43,000 contributors from local governments. Every three years, an actuarial valuation is performed to assess the financial position of the plan and adequacy of plan funding. The actuary determines an appropriate combined employer and member contribution rate to fund the plan. The actuary’s calculated contribution rate is based on the entry age normal cost method, which produces the long-term rate of member and employer contributions sufficient to provide benefits for average future entrants to the plan. This rate may be adjusted for the amortization of any actuarial funding surplus and will be adjusted for the amortization of any unfunded actuarial liability. The most recent actuarial valuation for the Municipal Pension Plan as at December 31, 2021, indicated a $3,761 million funding surplus for basic pension benefits on a going concern basis. The Corporation paid $38,632 (2022 - $36,793) for employer contributions to the plan in fiscal 2023. The next valuation will be as at December 31, 2024, with results available in 2025. Employers participating in the plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the plan records accrued liabilities and accrued assets for the plan in aggregate, resulting in no consistent and reliable basis for allocating the obligation, assets and cost to individual employers participating in the plan. 11
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