TRURO GOLF CLUB FINANCIAL STATEMENTS FOR THE YEARS ENDED OCTOBER 31, 2013 AND OCTOBER 31, wbli ~ ~"~ ~ ACCOUNTANTS

Transcription

1 FINANCIAL STATEMENTS FOR THE YEARS ENDED OCTOBER 31, 2013 AND OCTOBER 31, 2012 wbli ~ ~"~ ~ ACCOUNTANTS

2 CONTENTS PAGE Independent Auditors Report Statements of Financial Position Statements of Changes in Net Assets Statements of Operations Statements of Cash Flows Schedules of Gross Profit - Schedule A Notes to the Financial Statements Wb]i CHARTERED,~CCOUNTANTS

3 wbli CHARTERED ACCOUNTANTS INDEPENDENT AUDITORS REPORT Results. Delivered. To the Board of Directors of the Truro Golf Club We have audited the accompanying financial statements of the Truro Golf Club, which comprise the statements of financial position as at October 31, 2013, October 31, 2012 and November 1, 2011, and the statements of operations, changes in net assets and cash flows for the years ended October 31, 2013 and October 31, 2012, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Truro Golf Club as at October 31, 2013, October 31, 2012 and November 1,2011, and the results of its operations and its cash flows for the years ended October 31, 2013 and October 31, 2012 in accordance with Canadian accounting standards for not-for-profit organizations. CHARTERED ACCOUNTANTS Truro, Nova Scotia December 5, 2013 (902) (902) Dar tmouthof fice@wbli ca (902) (902) TruroOffice@wbli ca

4 STATEMENTS OF FINANCIAL POSITION AS AT OCTOBER 31, 2013 AND OCTOBER 31, CURRENT ASSETS Accounts receivable Inventories (note 3) Prepaid expenses ASSETS 16,052 23,191 41,105 39,753 23~433 23,078 80,590 86,022 PROPERTY, PLANT AND EQUIPMENT AND ASSETS UNDER CAPITAL LEASE (note 4) 1~435,812 1,500,592 1,516,402 1,586,614 LIABILITIES CURRENT LIABILITIES Bank indebtedness (note 5) Accounts payable and accrued liabilities Government remittances payable Deferred revenue (note 6) Current portion of obligations under capital lease (note 7) Current portion of long-term debt (note 8) OBLIGATIONS UNDER CAPITAL LEASE (note 7) 44,810 84,485 53,592 51,101 36,715 25,509 15,879 4,724 42,208 40, , , , ,064 72, ,365 LONG-TERM DEBT (note 8) NET ASSETS COMMITMENTS (note 10) APPROVED ON BEHALF OF THE BOARD NET ASSETS 7,500 10~ ~ ~429 1~042,664 1,041,185 1t616,402 1,586,614 Director Director wbli CHAR TERE[3 ACCOUN rants 2

5 STATEMENTS OF CHANGES IN NET ASSETS NET ASSETS - beginning of year Excess of revenues over expenses for the year NET ASSETS - end of ~,ear ,041,185 1,479 1 ~042~ ,019,180 22,005 1,041,185 wbli CItARTERED ACCOUNTANTS 3

6 STATEMENTS OF OPERATIONS Budget REVENUE COST OFGOODSSOLD GROSS PROFIT (SCHEDULE A) ADMINISTRATIVE AND SUPERVISORY EXPENSES Advertising Amortization Bad debt Bank charges and interest Building maintenance Equipment lease Heat Insurance Interest on long-term debt Junior golf Ladies and men s division Legal and other professional fees Licenses and fees Lights and power Office supplies and postage Property taxes Salaries and benefits - administration Salaries and benefits - professional and supervision Social Sundry Vehicle maintenance WCB and Blue Cross benefits 1,308,300 1,236,080 1,254, , , , , , ,922 12,000 10,929 11,459 82,000 81,842 82,374 1, ,101 21,000 19,572 19,443 50,000 34,022 29,690 7,000 8,390 6,576 7,500 7,800 7,811 19,000 18,360 18,175 12,000 9,197 9,647 1,000 1,000 2,000 1,091 1,783 7,500 8,525 7,805 16,000 14,495 16,281 29,500 27,014 27,155 11,000 5,658 11,235 35,000 34,871 34,620 36,000 32,881 35,928 81,000 78,365 75,319 1, ,593 9,000 11,008 10, ,000 22,181 22, , , ,265 EXCESS OF EXPENSES OVER REVENUES FOR THE YEAR BEFORE OTHER INCOME OTHER INCOME Rentals Sundry Tee signs (10,640) (21,084) (1,343) 10,000 3,942 3,867 5,000 4,453 5,363 13,000 14,168 14,118 28,000 22,563 23,348 EXCESS OF REVENUES OVER EXPENSES FOR THE YEAR lt479 22F005 wbli CHARTERED ACCOUNTANTS 4

7 STATEMENTS OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES: Cash provided from (used in) operations Excess of revenues over expenses for the year Items in income not involving cash Amortization Change in non-cash working capital balances Accounts receivable Inventories Prepaid expenses Accounts payable and accrued liabilities Government remittances payable Deferred revenue CASH FLOWS USED IN FINANCING ACTIVITIES: Repayment of obligations under capital lease Proceeds from long-term debt Repayment of long-term debt 1,479 22,005 87~ ,842 89, ,847 7,139 13,874 (1,352) 5,423 (365) 667 2,491 (311) 11,206 (10,619) 11,155 2~ ~ (40,364) (72,611) 70,000 (86,504) (72,500) (56,868) (145,111) CASH FLOWS USED IN INVESTING ACTIVITIES: Acquisition of property, plant and equipment (23,042) (50,490) CHANGE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 39,675 (56,431) CASH AND CASH EQUIVALENTS - beginning of year (84,486) (28,054) CASH AND CASH EQUIVALENTS - end of ~/ear I r81ol /84,485/ Cash and cash equivalents is comprised of: Bank indebtedness 1,81ol /84,485/ wbli ACCOUNTANTS 5

8 SCHEDULES OF GROSS PROFIT Budget Actual Actual % % SCHEDULE A COURSE FEES Membership fees Green fees 470, , , , , , , ~ ~ Gas and oil 25, , , Horticultural 1, Interest on lease obligations 12, , , Machinery repair 12, , , Maintenance 47, , , Seed and fertilizer 23, , , Wages and benefits 217, ~ , , , , t , FOOD AND BEVERAGE Kitchen revenue Bar revenue Beverage cart revenue Purchases and supplies Maintenance Wages and benefits 135, , , , , , , ~ , ~ , , , , , ~ ~ , ~ , , , , , Wb]i CHARIERED ACCOUNTANTS 6

9 SCHEDULES OF GROSS PROFIT Budget Actual Actual % % SCHEDULE A TOURNAMENT Tournament fees 55, , , Tournament costs 44, , , ~ , GOLF CART RENTALS Golf cart rental income Rentals Interest on lease obligation Amortization PRO SHOP OPERATIONS Pro shop sales Member services sales Maintenance Purchases and supplies Freight Wages and benefits 90, , , , , , , ~ A , , , ~ , , , , , , , , , , , , , , , , , , ~ , , ~ ~ , , !16,2011 /9.41/ /20,408/ /12.67/ GROSSPROFIT , ,922 Wbli CHARTERED ACCOUNTANTS 7

10 NOTES TO THE FINANCIAL STATEMENTS STATUS AND NATURE OF ACTIVITIES The club, incorporated under the laws of the Province of Nova Scotia, operates a golf club facility in Truro, NS. The Truro Golf Club is a not-for-profit organization as described in Section 149(1)(e) of the Income Tax Act and, therefore, is exempt from income taxes. 1. SIGNIFICANT ACCOUNTING POLICIES The financial statements were prepared in accordance with Canadian accounting standards for not-for-profit organizations (ASNPO) and include the following significant accounting policies: Cash and Cash Equivalents The club s policy is to disclose bank balances under cash and cash equivalents, including bank indebtedness with balances that fluctuate frequently from being positive to overdrawn. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined on an average basis. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling costs. The cost of inventories are comprised of the invoice cost. Property, Plant and Equipment and Assets Under Capital Lease Property, plant and equipment is stated at cost. All contributed property, plant and equipment are recorded at the fair value at the date of contribution. Amortization is provided for using the declining balance method at the following annual rates: Buildings 5% Computer hardware 55% Computer software 100% Pavement Vehicles 5% 30% Watering system 10% Website 55% Course equipment is being amortized at different rates depending on the useful life of the underlying asset. The rates vary from 20% - 30% using the diminishing balance method, as well as the straight-line method over 54 months and ten years. Furniture and fixtures, kitchen, office and pro shop equipment are being amortized by the straight-line method over ten years. Vehicles under capital lease are being amortized by the straight-line method over 54 months. Impairment of Long-lived Assets A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. Any impairment loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. wbli ACCOUNTANTS 8

11 NOTES TO THE FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (continued) Recognition of Revenue The club follows the deferral method of accounting for revenues. Revenue from memberships, green fees, tournament fees, kitchen and canteen, pro shop sales and sundry income are recorded when the risks and rewards of ownership have been transferred, which is normally the date of sale. Rental revenue, tee sign rentals, and member services sales are recognized as services are rendered. Use of Estimates The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the current period. These estimates are reviewed periodically and adjustments are made to income as appropriate in the year they become known. Financial Instruments Measurement of Financial Instruments The club initially measures its financial assets and liabilities at fair value. The club subsequently measures all its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include accounts receivable. Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities, government remittances payable, obligations under capital lease and long-term debt. Impairment Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of any write-down is recognized in the statement of operations. Any previously recognized impairment ross may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of any reversal is recognized in the statement of operations. Transaction Costs The club recognizes its transaction costs in the statement of operations in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption. wbli ACCOUNTANTS 9

12 NOTES TO THE FINANCIAL STATEMENTS 2. FIRST TIME ADOPTION OF ACCOUNTING STANDARDS FOR NOT-FOR-PROFIT ORGANIZATIONS Truro Golf Club is a not-for-profit organization and was incorporated under the laws of the Province of Nova Scotia. The club has elected to apply the Canadian accounting standards for not-for-profit organizations, under Part Ill of the Chartered Professional Accountants (CPA) Handbook, in accordance with Canadian generally accepted accounting principles. As these financial statements are the first financial statements for which the club has applied the Canadian accounting standards for not-for-profit organizations, the financial statements have been prepared in accordance with the provisions set out in First-time Adoption by Not-For-Profit Organizations, Section 1501 of Part III of the CPA Handbook, for first-time adopters of this basis of accounting. The club is required to apply Part III for the year ending October 31, At the time of adoption, the organization would account for any material change as a result of adopting the framework as an adjustment to its net assets at the date of transition, which is November 1,2011. The club is required to apply Part III for periods ending on October 31, 2013 in: a) preparing and presenting its opening statement of financial position at November 1, 2011; and b) preparing and presenting its statement of financial position for October 31, 2013 (including comparative amounts for 2012), statement of operations, statement of changes in net assets, and statement of cash flows for the year ended October 31, 2013 (including comparative figures for 2012) and disclosures (including comparative figures for 201 The adoption of the Canadian accounting standards for not-for-profit organizations did not result in any adjustments to opening net assets as of November 1, 2011; therefore, the opening statement of financial position has not been presented. The comparative statements of operations and cash flows for the year ended October 31, 2012 also did not change from those previously reported. The notes to the financial statements do not include the balances as at November 1,2011 because there were no changes as of the date of transition. 3. INVENTORIES Inventories consist of the following: Course supplies 4,478 5,401 Kitchen and bar 7,696 9,551 Pro shop 28,931 24,801 41,105 39,753 ACCOUNTANTS 10

13 NOTES TO THE FINANCIAL STATEMENTS PROPERTY, PLANT AND EQUIPMENT AND ASSETS UNDER CAPITAL LEASE Accumulated Net Book Net Book Cost Amortization Value Value Land 902, , ,762 Buildings 735, , , ,905 Computer hardware 10,685 10, ,094 Computer software 8,527 7,527 1,000 Course equipment 295, ,398 36,312 47,609 Course equipment under capital lease 230, , , ,645 Furniture and fixtures 162, ,964 9,446 11,409 Kitchen equipment 84,431 80,236 4,195 4,914 Office equipment 16,680 15,594 1, Pavement 16,786 9,438 6,348 6,683 Pro shop equipment 27,893 25,736 2,157 4,947 Vehicles 63,619 62,410 1,209 1,728 Vehicles under capital lease 117, ,380 11,960 17,940 Watering system 202, ,594 25,122 27,913 Website 6,500 5, ,880,599 1,444,787 1,435,812 1,500, BANKINDEBTEDNESS At October 31, 2013, the club had an available line of credit of 150,000 of which 17,102 ( ,924) had been drawn down. The line of credit is a demand loan and bears interest at prime plus 0.50%. It is secured as described in note DEFERRED REVENUE Deferred membership fees Deferred tournament fees Junior division restricted fundraising revenue Ladies division restricted fundraising revenue ,565 1,687 8,450 4,980 2, t5p879 4r725 wbli ACCOUNTANTS 11

14 NOTES TO THE FINANCIAL STATEMENTS 7. OBLIGATIONS UNDER CAPITAL LEASE Course equipment lease, payable in 6 monthly instalments (May to October) of 2,035, including interest calculated at 5.6%, maturing in October This lease is secured by course equipment with a net book value of 21,075. Course equipment lease, payable in 6 monthly instalments (May to October) of 6,094, including interest calculated at 5.7%, maturing in October This lease is secured by course equipment with a net book value of 86,885. Less current portion ,742 33,200 91, , , ,729 42,208 40,364 Future minimum annual lease payments payable under the capital leases are as follows: , , ,597 Total minimum lease payments 124,145 Amount representinginterest 9,780 Balance of the obligation 114~ ,365 CHARTERED ACCOUNTANTS 12

15 NOTES TO THE FINANCIAL STATEMENTS 8. LONG~ERM DEBT % ClBC demand instalment loan, although demand in nature, is being repaid in annual principal instalments of 70,000 plus monthly interest, maturing June 30, 2015, at which time a final payment of 72,381 will be made. Prime plus 0.75% CIBC demand instalment loan, although demand in nature, is being repaid in 6 monthly instalments per annum of 2,334 plus interest, maturing October ,381 55, ,381 Non-interest bearing Town of Truro loan is being repaid in annual instalments of 2,500 (as described in note 9) ending in 2017, This loan is unsecured. 10,000 12,500 Less current portion 208, , , , ~000 The approximate principal due within each of the next five years, assuming repayments of the loans under negotiated terms, is as follows: , , , ,484 The CIBC loans are secured by a general security agreement over all present and after acquired personal property and a fixed demand debenture in the amount of 1,300,000 over the property at 86 Golf Street and all related parcels of land owned by the club and an assignment of insurance. The carnjing value of the land and building at October 31, 2013 was 1,227,780 (2012-1,226,667). As part of the credit facility agreement for the line of credit and demand bank loans, the organization cannot exceed capital expenditures of 150,000 without the lender s prior consent. In addition, the organization s debt to equity ratio shall not exceed 1.1:1 and have no outstanding debt or liability under the (ine of credit for at least 30 days in each fiscal year. The organization is in compliance with the covenants included in the bank loan credit facility agreement. 9. NON-MONETARY TRANSACTION The club has entered into an agreement with the Town of Truro to provide 2,500 of green fees annually to repay the outstanding loan. The green fees are only valid for the period in which they are issued. The transaction has been measured at the fair value of the green fees, as the value is known. wbli ACCOUNTANTS

16 NOTES TO THE FINANCIAL STATEMENTS 10. COMMITMENTS The organization has two equipment leases, expiring in June and October Future minimum lease payments under these operating Leases including HST are as follows: 11. FINANCIAL INSTRUMENTS , , , ,746 Risks and Concentrations The club is exposed to various risks through its financial instruments. The following analysis provides a measure of the club s risk exposure and concentrations at the balance sheet date. Liquidity Risk Liquidity risk is the risk that a club will encounter difficulty in meeting obligations associated with financial liabilities. The club is exposed to this risk mainly in respect of its bank indebtedness, accounts payable and accrued liabilities, government remittances payable, obligations under capital lease and long-term debt. Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The club s main credit risks relate to its accounts receivables. The club provides credit to its clients in the normal course of its operations. During the current year, the club incurred bad debt expense of 84 (2012-3,101). Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The club is mainly exposed to interest rate risk. Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The club is exposed to interest rate risk on its fixed and floating interest rate financial instruments. Given the current composition of debt (proportion of debt at a fixed interest rate compared to a floating interest rate), fixed-rate instruments subject the club to a fair value risk while the floating-rate instruments subject it to a cash flow risk. The carrying amount of all secured financial liabilities amounts to 329,844 ( ,034). 12. COMPARATIVE FIGURES Certain comparative figures in the financial statements have been reclassified to conform with the financial statement presentation adopted for the current year. Wbli CHARTERED ACCOUNTANTS 14