Forest Resource Improvement. Association of Alberta

Transcription

1 Forest Resource Improvemet Associatio of Alberta

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3 Table of cotets Presidet s Message 2 Strog Support 3 Board of Directors 3 Committees ad Paels 4 Program Highlights 6 Busiess Pla Highlights 8 Fiacial Highlights 13 Auditors Report 13 Fiacial Statemets Year eded March 31, 2008 Statemet of Fiacial Positio 14 Statemet of Reveues ad Expeditures 15 Statemet of Net Assets 16 Statemet of Cash Flows 17 Notes to Fiacial Statemets 18 FRIAA Members 21 1

4 Presidet s Message 2 The 2008 fiscal year has provided may challeges for the forestry sector, both evirometal ad ecoomic. The effects of isect ifestatios, fire damage ad poor markets o Alberta s forests ad forest idustry have created challeges ad opportuities for FRIAA to serve Albertas. FRIAA looks to the future with optimism ad with a focus o the orgaizatio s primary goal to cotribute to the health, productivity, ad sustaiability of Alberta s forests ad forested lads. FRIAA cotiues to work with Alberta Sustaiable Resource Developmet to meet this goal ad esure FRIAA s activities cotiue to provide beefits for Albertas. Over the past year, the Commuity Reforestatio Program (CRP) has ecoutered the most sigificat issues sice its lauch i Icreasig costs ad levy rates that have ot chaged sice FRIAA was delegated resposibility for the program have resulted i a reforestatio fud that is ot adequate to achieve reforestatio stadards o blocks harvested after Aual iflatio combied with operatioal complexities are causig risig costs which caot be adequately offset by static reforestatio levy rates. As well, umerous dispositio holders have ot paid reforestatio levies owig, causig further shortfall of the reforestatio fud. FRIAA has idetified these issues ad is workig to resolve them. CRP costs have bee cotrolled to a level ear or at those i 2000, despite icreased cost pressures. I additio, FRIAA has iitiated actios o past due accout holders i order to collect levies owig. FRIAA cotiues to work with Alberta Sustaiable Resource Developmet to develop feasible solutios to these issues ad esure CRP cotiues to provide achieve reforestatio objectives. Alberta s forest-based idustries cotiued to feel egative ecoomic effects as a result of the curret istability i the global ecoomy. The prologed low price of lumber across North America has resulted i the fall of FRIAA dues to record low levels over the past three years. Although project spedig i the Forest Resource Improvemet Program (FRIP) has decreased ad admiistratio costs have remaied at low levels, the fall i FRIAA dues to virtually zero results i a cotiued depletio of the FRIP fud. I spite of market pressures o the FRIP fud, our prudet fud maagemet approach has esured that all of the fud s capital has bee preserved ad that a surplus of ivestmet icome remais available to cover the costs of maagemet ad admiistratio. FRIAA is workig with Alberta Sustaiable Resource Developmet to develop a strategy for the logterm sustaiability of the FRIP fud. Discotiuig FRIP would have a sigificat egative impact o the public ad Alberta s forestry sector; fidig a solutio to sustai FRIP is a top priority for FRIAA. Despite progress over the past year, evirometal challeges such as the moutai pie beetle ifestatio ad catastrophic wildfires still threate Alberta s forests ad forest commuities. FRIAA s Moutai Pie Beetle Program (MPBP) cotiues to support beetle detectio ad cotrol activities i Alberta, ad has grow to iclude over 20 participat orgaizatios. As well, activities uder FRIAA s Wildfire Reclamatio Program (WRP) moved forward over the past year. The Wildfire Reclamatio Program has committed over $41 millio sice 1998 to retreat reforested cutblocks destroyed by wildfire, esurig that they grow ito fully productive forests. Lookig ahead, there cotiue to be may opportuities to provide further beefits to Albertas. FRIAA s prove track record i soud, accoutable goverace ad efficiet admiistratio make our orgaizatio a attractive meas to deliver fuded programs. FRIAA s ewest iitiative, the Fire Hazard Reductio ad Forest Health Program, will ehace Alberta s forest resource through forest maagemet activities desiged to reduce fire hazard ad maitai forest health. Other opportuities for FRIAA to serve Albertas are beig ivestigated ad as always, FRIAA is committed to sustaiig its key programs that are so importat to our members ad the public. Trevor Wakeli, Presidet

5 FRIAA Works With Miister to Establish Uique, Fuctioal Forestry Ehacemet Programs Board of Directors Presidet: Trevor Wakeli Vice Presidet: James Bockig Secod Vice-Presidet: Doug Sklar Treasurer: Murray Summers Directors: Jurge Moll Dwight Weeks David Kiil Bruce Macmilla Over the past year, FRIAA has bee workig closely with the Miister of Alberta Sustaiable Resource Developmet to establish cosistet, relevat priorities. By lauchig ew, iovative programs ad maitaiig the success of existig programs, FRIAA will provide support to members ad stakeholders while aligig with Provicial goals. Specifically, FRIAA s busiess pla clearly idicates that FRIAA supports the Miister by matchig programs ad iitiatives with both Provicial ad Sustaiable Resource Developmet s (SRD) goals ad objectives: Provicial Goal #3 - The high quality of Alberta s eviromet will be sustaied. SRD Goal #1 - Alberta s public lads, icludig ragelads ad shore lads, are healthy, productive, ad sustaiable. SRD Goal #2 - Alberta s forests ad forest commuities are protected from wildfires. SRD Goal #3 - Alberta s forest ad forest ladscapes support healthy ecosystems ad commuities. SRD Goal #4 - Alberta s fish ad wildlife resources ad their habitats are healthy, productive, ad sustaiable. I 2008/09, FRIAA cotiued to demostrate success with its forestry ehacemet programs. The Forest Resource Improvemet Program, Wildfire Reclamatio Program, Commuity Reforestatio Program, ad Icidetal Coifer Program cotiue to experiece sigificat support from idustry. Projects completed uder each of these programs over the past year have helped to sustai Alberta s forest resources, stregthe the forest idustry ad provide tagible results for all Albertas. Most oticeably, the recet Moutai Pie Beetle Program has had over 40 active projects sice its iceptio i 2007, solidifyig this cooperative effort betwee FRIAA ad SRD as a wiig iitiative. With the success of the Moutai Pie Beetle Program, FRIAA ad SRD have evaluated a umber of potetial ew programs over the past year. The relatioship betwee FRIAA ad the Miister of SRD is strog ad results i may excellet projects ad iitiatives that improve ad ehace forest resources for Albertas. I particular, developmet of the Fire Hazard Reductio ad Forest Health Program is uderway. This uique program is desiged to maitai ad ehace Alberta s forest resource through activities iteded to reduce fire hazard ad maitai forest health. This iitiative aligs with SRD s FireSmart ad Forest Health programs. FRIAA expects the forest idustry will be very receptive to this program upo implemetatio, allowig the program to provide the largest possible beefit to Alberta s forests ad forest commuities. FRIAA prides itself upo commuicatig effectively with its members, stakeholders, ad Alberta Sustaiable Resource Developmet. The subsequet iformatio provided i this report demostrates that FRIAA is performig well i relatio to its goals, cotiues to build o strog relatioships with govermet ad idustry ad is active, effective ad accoutable i fulfillig its madate. 3

6 Committees ad Paels The Board establishes committees to maage specific board fuctios that require attetio outside of regularly scheduled board meetigs. Madates for these committees are established by the Board i accordace with its policies ad accoutability framework. Committees report directly to the Board as a whole ad report agaist relevat policies ad madates. Two stadig committees have bee established by the Board the Audit Committee ad the Fud Maagemet Committee. 1. Audit Committee The Audit Committee meets at least twice each year ad has a madate established by the Board that icludes: Overseeig the preparatio of fiacial statemets by maagemet ad the coduct of audits by FRIAA s auditors. Recommedig a auditor to the members for approval. Members of this committee are: James Bockig Murray Summers David Kiil 2. Fud Maagemet Committee The Fud Maagemet Committee meets twice yearly ad reports to the Board i accordace with FRIAA s fud maagemet policy. The Committee s resposibilities iclude: Esurig the requiremets of FRIAA s statemets of ivestmet policies ad goals for FRIP ad CRP are observed. Assessig the performace of FRIAA s ivestmet maager ad the ivestmet fud agaist specific targets ad measuremet criteria. Moitorig to esure FRIAA s ivestmet returs targets are achieved. Members of this committee are: James Bockig Murray Summers David Kiil I additio to the two stadig committees described above, FRIAA has also established specific committees with specific madates, icludig the Ope Fuds Pael ad the Appeal Pael, whe required. 3. Ope Fuds Pael The Ope Fuds Pael was established by the Board to review, evaluate, ad make recommedatios o fudig projects submitted uder the FRIP Ope Fuds Iitiative i the 2008/09 year. The Pael s resposibilities icluded: Developmet of a project proposal evaluatio ad selectio process that is trasparet, equitable, ad accoutable. Selectio ad recommedatio of project proposals that meet criteria established by the Board of Directors ad that best represets the iterests of FRIAA. Members of this Pael were selected based o their sigificat experiece ad ubiased positio towards proposal evaluatios. The members of the pael were: David Kiil, Director of FRIAA (Public-At-Large Appoitmet), Former Director Geeral of the Norther Forestry Research Cetre. Cliff Hederso, Former Assistat Deputy Miister, SRD Barry White, Scietific Advisor, Alberta Sustaiable Resource Developmet. 4. Appeals Pael A Appeals Pael ca be established whe eeded to hear appeals iitiated by the membership. Members for such Paels are selected o a case-by-case basis depedig o their area of expertise ad suitability for the matter at had. There were o appeals i 2008/09 ad o appeal pael was struck. 4

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8 Program Highlights 6 Programs delivered by FRIAA iclude the Forest Resource Improvemet Program (FRIP), the Commuity Reforestatio Program (CRP), the Wildfire Reclamatio Program (WRP), the Icidetal Coifer program (ICP), ad the Moutai Pie Beetle Program (MPBP). The objectives of these programs are aimed at improvig the forests of Alberta ad to ehace the maagemet of Alberta s forests for the beefit of all Albertas. The key accomplishmets relative to the admiistratio of FRIAA s programs iclude: a. Maitaiig the Forest Resource Improvemet Program (FRIP) The FRIP cotiued to be delivered at plaed levels of activity i spite of FRIP dues that have bee at historic low levels. FRIP project expeditures were maitaied ear the log term average level with just uder $12 millio spet o FRIP projects over the year. I additio, there is $19 millio committed to ogoig FRIP projects as of March 31, Respose to FRIAA s Ope Fuds Iitiative cotiued to be positive. I the summer of 2008, a call for proposals was released ad a total of 18 proposals were submitted to the Ope Fuds Pael. These proposals addressed a wide rage of topic areas ad comprised $3 millio of cumulative fudig requests. Proposals were accepted i two categories Provice wide proposals ad local proposals. The fial selectio of successful proposals resulted i 11 projects ad a commitmet by FRAA of $1.5 millio i fudig. b. Cotiuous Improvemet of the Commuity Reforestatio Program (CRP) I 2000, the CRP was trasferred from the Govermet of Alberta to FRIAA. This icluded resposibility for reforestig cutblocks harvested after May 2000 as well as cotiuig govermet s reforestatio activities o older cutblocks harvested prior to May I 2008/2009, FRIAA cotiued to make good progress o both parts of the Program. The CRP subprogram related to blocks harvested betwee 1994 ad 2000 is fuded by trasfers from govermet that represets reforestatio levies collected by govermet from timber permit ad licece holders that harvested timber o those areas. To date, the govermet has trasferred $16.8 millio i support of this subprogram. FRIAA has focused o completig regeeratio surveys ad stad tedig o priority areas i order to optimize the results of the program. The CRP subprogram related to blocks harvested after May 30, 2000 is fuded by reforestatio levies paid directly to FRIAA. FRIAA has cotiued to use the govermet s reforestatio levy rate that was established i 2000; however this static levy rate coupled with iflatioary pressures o costs is causig cocer respectig the balace betwee program operatioal objectives ad fudig pressures. A detailed review of the situatio, icludig the levy rate ad method of applicatio, is beig udertake to help esure that the program is sustaiable. Collectig reforestatio levies from dispositio holders has bee difficult for FRIAA because levies are assessed o the volume of timber harvested but FRIAA does ot have access to ad caot track this iformatio. A umber of past due accouts have bee idetified ad FRIAA has take steps to recover these amouts i order to support the reforestatio work required. c. Maitaiig the success of the Wildfire Reclamatio Program (WRP) All eligible participats i the 1998 program have bee actively egaged i wildfire reclamatio work. May of the activities are ow focused o the fial stages of successful reforestatio. Program activities have bee ehaced with a emphasis beig placed o the completio of establishmet regeeratio surveys to provide performace measures uder the program. I additio to maagig the 1998 WRP program i its late stage of implemetatio, a secod grat agreemet that was siged o July 3, 2007 has thus far result i the retreatmet of over 3000 hectares of reforested cutblocks damaged or destroyed by wildfires i 2006, 2007, ad d. Expadig the Moutai Pie Beetle Program (MPB) O April 1, 2007 the MPB program was established to deal with the effects of the Moutai Pie Beetle ifestatio i the summer of The program s primary focus

9 is moitorig the movemets of the Moutai Pie Beetle through groud ad aerial surveys, as well as cotaimet efforts to keep the beetle from spreadig. The fudig comes directly from the Miistry of Sustaiable Resource Developmet to FRIAA to deliver the program. To date, the program has distributed over $1.9 millio ad as of March 31, 2009, aother $2 millio has bee committed to ogoig projects.

10 Busiess Pla Highlights Through a three-year busiess pla, the Board has provided guidace ad directio for FRIAA s ogoig admiistratio. This busiess pla idetifies a umber of goals, strategies ad performace expectatios to esure FRIAA s effectiveess ad efficiecy. The followig describes FRIAA s performace over the past year relative to the April 1, 2008 to March 31, 2011 busiess pla submitted to the Miister o February 28, 2008: Goal oe: To cotribute to the health, productivity, ad sustaiability of Alberta s forests Optimize active participatio i the Forest Resource Improvemet Program FRIAA will strive to icrease the level of active participatio i FRIP to promote its objectives ad madate. Results: Participat Size Number of Members *Icludes o-member participats Number of FRIP Project Participats (m 3 /year) 06/07 07/08 08/09 06/07 07/08 08/ , * 15* 27* 10, , * 10* 10* 107, FRIAA s goal is for 100% participatio of medium ad large member compaies. FRIAA has effectively achieved this goal for medium ad large-sized compaies. Through the Ope Fuds Iitiative, access to FRIP fuds has bee exteded to o-members. This accomplishes the goal of expadig participatio ad access i the Forest Resource Improvemet Program. Effectively reforest cutover areas that are withi the scope of the Commuity Reforestatio Program FRIAA has established a goal of effective reforestatio i a maer that is cosistet with the reforestatio stadards set out i the Timber Maagemet Regulatios ad the Alberta Regeeratio Survey Maual. Results: Subprogram Harvested Area Withi Program (Ha) Area with Treatmet Commeced (Ha) Area Meetig Applicable Reforestatio Stadard (Ha) Area with Outstadig Treatmet Requiremets (Ha) Area that did ot Meet Ay Stadard o Fial Survey (Ha) ,069 32,069 10,687 20, Post ,085 22,604 3,128 19,957 0 Total 55,154 54,673 13,815 40, FRIAA cotiues to reforest areas harvested after May 2000 through a well plaed program liked to the Provice s Commuity Reforestatio Program. All areas are beig treated i a maer that is cosistet with the Timber Maagemet Regulatios ad Alberta Regeeratio Survey Maual. Iitial reforestatio treatmet work o areas harvested prior to May 2000 was carried out with the fudig trasferred from the Provice. FRIAA has carried out iitial site preparatio ad platig work ad the remaiig fuds are adequate to carry out establishmet surveys for most of the areas. The level of fudig is cotiuously moitored ad FRIAA is takig steps to esure sufficiet fudig is i place.

11 Goal two: To reduce the impact of wildfires o Alberta s Forests ad Forest Sustaiability Deliver the Wildfire Reclamatio Program i a Cost Efficiet Maer The Wildfire Reclamatio Program is aimed at stabilizig sites ad re-establishig forest cover i areas affected by fires. The delivery of the Wildfire Reclamatio Program ivolves maagig agreemets with program participats ad trackig activities o specified areas of the program. Cost efficiecy is sought by esurig appropriate use of fuds towards the program s objective as well as miimizig overhead costs through efficiet admiistrative policies ad procedures. WRP Facts WRP 1998 Grat Agreemet Program iceptio to date Total Seedligs Plated 41,210,834 Seedligs Total Area Plated 25,271 Hectares Total Area Assessed 32,658 Hectares WRP Facts WRP 2007 Grat Agreemet Program iceptio to date Total Seedligs Plated 1,124,768 Seedligs Total Area Plated 682 Hectares Total Area Assessed 1,036 Hectares The measure of performace towards this goal is to maitai a target admiistratio/ project expediture ratio of five percet or less. The results idicate that FRIAA has bee meetig ad exceedig this expectatio for the duratio of the program with a ratio of maagemet to direct operatios costs over the lifetime of the program of 3.98% ad 4.55% for the 1998 ad 2006 agreemets, respectively. I the future, FRIAA will cotiue to strive to achieve this target. Goal three: To ehace Alberta s forests to support healthy ecosystems ad fish ad wildlife resources Supportig FRIP projects that ivolve the full rage of eligible ehacemet activities Differet approaches for improvig forest resources ad the maagemet of Alberta s forests fall ito oe of four categories. FRIAA will support projects across all of these categories. The measuremet of performace towards this goal is to be based o trackig projects withi each category over time. The followig results reflect active projects withi the fiscal year. Results: Project Category Actual (Percetage Share by Number of Projects) Actual (Percetage Share by Value of Projects) Operatioal Field Work 6 7 Ivetory & Plaig Applied Research Other The percet value of the projects is sigificatly uder the target rage for operatioal field projects ad over the target rage for applied research ad other projects. The fall i operatioal field projects was primarily offset by a icrease i projects categorized as Other. These miscellaeous projects iclude activities such as lake aeratios, recreatio area care, wildlife coservatio ad support for forest educatio for the geeral public. FRIAA will cotiue to moitor these treds ad evaluate the impact, if ay, o the program objectives. 9

12 Iitiate reforestatio activities uder the Commuity Reforestatio Program withi two years after harvestig FRIAA will maage its reforestatio program i a maer that allows it to meet the Timber Maagemet Regulatio requiremet of iitiatig reforestatio activities o cutblocks withi two years of harvestig. Results: FRIAA is developig ad aggressively pursuig the goal of iitiatig reforestatio treatmets withi 2 years of harvest o 100% of blocks harvested after May 30, As of March 31, 2009 all areas commuicated to FRIAA immediately upo skid clearace have iitially bee treated withi two years of harvest. FRIAA cotiues to work with the govermet o blocks that are commuicated to FRIAA after the two year period has already passed or caot be reasoably met. The timig of block iformatio beig passed o to FRIAA remais critical. Goal four: To support a sustaiable forest idustry as resposible stewards Ecourage full ad efficiet use of FRIP fuds Full ad efficiet use of FRIP fuds is promoted through the strategy of icreasig participatio levels as well as actively ecouragig FRIP projects by makig fuds available for projects for 36-moth periods of time after fuds are cotributed. Results: Project Size Category Actual (Percetage Share by Number of Projects) Actual (Percetage Share by Value of Projects) Uder $50, $50,000 - $250, Over $250, Total FRIAA s performace measure is reviewed over time by moitorig the sizes of projects carried out ad evaluatig the cosequeces, if ay, o the efficiet use of fuds. The distributio of project sizes has stabilized over the past three years, with participats favourig medium sized projects. With a decreasig FRIP fud ad fewer opportuities for large operatioal projects, FRIAA expects more small ad medium sized projects i the future. I the past, FRIAA had provided FRIP participats with a 36 moth time frame durig which they could utilize their cotributed fuds. After this three-year widow has passed, such fuds would ormally have become available for projects as determied by the Board of Directors. I 2008/09, FRIAA rescided this 36 moth rule ad ow allows orgaizatios a exteded time frame before their fuds expire. This actio was take i order to slow the depletio of the FRIP fud. 10

13 Goal five: To esure full accoutability to all Albertas Effective Goverace FRIAA will fulfill its resposibility to deliver effective ad efficiet admiistratio ad to meet its obligatios through soud corporate goverace. Results: Legislative Requiremets Requiremet Actio Status Busiess Pla A three year Busiess Pla idicatig goals I Compliace shall be provided to the Miister aually. Aual Report A Aual Report summarizig activities I Compliace ad cotaiig fiacial statemets shall be provided to the Miister. FRIAA Dues FRIAA dues shall be determied by FRIAA as per Regulatio Sectio 5(1) ad 5(1.1). No chages i dues i 2008/09 Notice of Chage of Bylaws Expiry of Regulatio Freedom of Iformatio ad Protectio of Privacy Act Requests Records Maagemet System Program Reportig to the Miister FRIAA shall give reasoable otice to the Miister of ay bylaw or object chages. FRIAA shall work with the Miister to complete regulatio review prior to expiry date. FRIAA shall adhere to FOIPPA regulatios. FRIAA shall have a reliable records maagemet system i place. All forestry ehacemet programs shall report to the Miister as per the grat agreemet requiremets. No chages i bylaws i 2008/09 Ogoig I Compliace I Compliace I Compliace Goverace Requiremet Actio Status Objects Review Periodically, FRIAA will review the objects of FRIAA I Compliace i order to esure activities udertake are withi its objects. Bylaws Review Aually, FRIAA s bylaws shall be reviewed with the I Compliace Board. Director Requiremets I accordace with bylaws, Directors of the Board are to be elected or appoited. Idemificatio of Directors is provided ad reimbursemet of the Directors expeses where the Board approves. I Compliace Directors Meetigs Fees Levied ad Debetures Fiacial Accoutability Aual Geeral Meetig Program Reportig to the Board MOU Review Directors meetigs must be called as per bylaw requiremets, ad quorum must be a majority. Miutes must be i writig ad approved by Directors. Fees are to be levied i accordace with bylaws. Debetures are ot to be provided without a special resolutio of the Members. FRIAA s fiacial records shall be audited aually ad provided to all members i the Aual Report. FRIAA shall hold a meetig of all Members oce each fiscal year. Quorum ad votig to take place as per the bylaws. All forestry ehacemet programs shall provide admiistratio reports to the Board o a regular basis. FRIAA will review the MOU with the Miister o a aual basis. I Compliace I Compliace I Compliace I Compliace I Compliace I Compliace 11

14 Esure full accoutability for FRIAA FRIAA will develop a comprehesive accoutability framework that esures that it acts i accordace with its madate ad objectives. The accoutability framework will gover FRIAA i a maer that esures that its madate is beig fulfilled, its objectives are beig pursued ad that its members ad Miister are well represeted. Results: All policies ad regulatory requiremets have bee reviewed i cojuctio with a yeared accoutability reportig process udertake by the Board of FRIAA. FRIAA aually udertakes a detailed review of all policies, bylaws, ad regulatory requiremets to esure that FRIAA is i compliace with its goverace ad accoutability framework. This review is documeted as a aual accoutability report. Commuicatig beefits FRIAA s madate focuses o beefits for Albertas through projects ad iitiatives. FRIAA strives to commuicate these beefits to Albertas. Results: FRIAA has established a website ad maitais commuicatios iformatio relevat to the admiistratio of the Associatio ad its programs. A ewsletter is produced ad distributed three times a year. The ewsletter highlights key activities ad poits of cocer to the membership, FRIAA dues remitters ad other stakeholders. FRIAA will cotiue to seek iput o its commuicatios activities. Policy Status Audit Committee Policy Approved August 26, Coflict of Iterest Policy Approved August 26, Audit Committee established August 26, Membership reviewed aually. Audit Committee has met i accordace with the policy ad reported agaist it regularly. Audit for 2008/09 has bee completed i accordace with the terms of the Policy ad legislative requiremets. Coflicts have bee reported ad recorded i accordace with the Policy. Appeal Policy Approved Jauary 19, 1998, as ameded. No appeals uder the Policy have bee iitiated i 2008/09. Fud Maagemet Policy Fud Maagemet Committee established November 17, Statemet of Ivestmet Policies ad Goals (FRIP) approved April 22, 1998 ad ameded December 4, Statemet of Ivestmet Policies ad Goals for the Commuity Reforestatio Fud approved December 1, 2003 ad ameded December 4, Mothly reports have bee made by the ivestmet maagers to the Committee ad Board i compliace with the policy ad ivestmet statemet. Ope Fuds Iitiative Approved Jue 4, Reviewed aually. Public-at-Large Director Selectio Protocol Policy reviewed ad cofirmed October Reviewed October 16, Commuity Reforestatio Program Approved ad effective May 30, Reviewed o a ogoig basis. Forest Resource Improvemet Program Descriptio ad Guidelies Approved August 26, 1997, as ameded, reviewed o a ogoig basis. Aual Budgetig Protocol Compliace i 2008/09. Aual Busiess Pla Review Process Compliace i 2008/09.

15 Fiacial Highlights FRIAA s fiacial statemets provide a overview of the fuds ad resources used to deliver its programs ad iitiatives. A few highlights of 2008/09 iclude: FRIAA dues receipts remaied close to il agai this year as lumber prices remaied very low. FRIP dues received were less tha $600,000 compared to a log term average of close to $12 millio. Auditors Report To the Members of the Forest Resource Improvemet Associatio of Alberta The FRIP fud was substatially reduced i size as FRIP project paymets were sigificatly higher tha reveues from all sources. A levellig off of the CRP fud as the umber of permits ad volume of timber maaged uder the Commuity Timber Program decreased while the implemetatio of reforestatio treatmets o past blocks carry o as plaed. We have audited the statemet of fiacial positio of the Forest Resource Improvemet Associatio of Alberta as at March 31, 2009 ad the statemets of reveues ad expeditures, chage i et assets, ad cash flows for the year the eded. These fiacial statemets are the resposibility of the Associatio s maagemet. Our resposibility is to express a opiio o these fiacial statemets based o our audit. A admiistratio cost ratio of 4.90% for FRIP i Sice its iceptio, FRIP has maitaied a low 4.51% average admiistratio cost ratio. WRP had admiistratio cost ratios of 3.98% ad 4.55% for the 1998 ad 2006 programs, respectively. A admiistratio cost ratio of 12.71% for CRP i (11.70% iceptio to date), reflectig a reductio i the size of the program ad icreased complexity of coordiatig the CRP. We coducted our audit i accordace with Caadia geerally accepted auditig stadards. Those stadards require that we pla ad perform a audit to obtai reasoable assurace whether the fiacial statemets are free of material misstatemets. A audit icludes examiig, o a test basis, evidece supportig the amouts ad disclosures i the fiacial statemets. A audit also icludes assessig the accoutig priciples used ad sigificat estimates made by maagemet, as well as evaluatig the overall fiacial statemet presetatio. Careful plaig ad cash maagemet strategies were established to esure that the capital i the CRP ad FRIP fuds was preserved. I our opiio, these fiacial statemets preset fairly, i all material respects, the fiacial positio of the Associatio as at March 31, 2009 ad the results of its operatios, chages i its et assets ad its cash flows for the year the eded i accordace with Caadia geerally accepted accoutig priciples. Grat Thorto LLP Chartered Accoutats Edmoto, Alberta May 27,

16 Statemet of Fiacial Positio March 31, 2009, with comparative figures for Assets Curret assets: Cash $ 9,279,293 $ 13,202,912 Restricted cash (Note 3) 9,429,341 9,487,877 Accouts receivable ad accrued iterest receivable 628, ,835 Ivestmets 5,668,202 8,104,473 Ivetory 33, ,736 Prepaid expeses ,040,116 31,603,699 Ivestmets 48,119,968 58,947,207 $ 73,160,084 $ 90,550,906 Liabilities ad Net Assets Curret liabilities: Accouts payable ad accrued liabilities $ 2,614,963 $ 478,436 Net assets: Forest resource improvemet program 41,465,050 56,707,308 Wildfire reclamatio program (Note 3) 9,276,238 9,319,037 Commuity reforestatio program (Note 4) 12,455,415 17,665,417 Icidetal coifer program (Note 5) 1,619,941 2,180,635 Moutai pie beetle program (Note 6) 5,728,477 4,200,073 70,545,121 90,072,470 Commitmets (ote 9) See accompayig otes to fiacial statemets. $ 73,160,084 $ 90,550,906 O behalf of the Board: 14 David Kiil Director Murray Summers Director

17 Statemet of Reveue ad Expeditures Year eded March 31, 2009, with comparative figures for 2008 Moutai Forest Wildfire pie Icidetal Commuity resource reclamatio beetle coifer reforestatio improvemet program program program program program total total (Note 3) (Note 6) (Note 5) (Note 4) Reveue: FRIAA Dues $ - $ - $ - $ - $ 594,173 $ 594,173 $ 89,269 Reforestatio levies ,254,707-2,254,707 2,264,240 Grats 730,272 5,000, ,730,272 11,474,995 Expeditures: 730,272 5,000,000-2,254, ,173 8,579,152 13,828,504 Accoutig 25,318 32,527 10,159 84,052 67, , ,380 Board meetigs , Commuicatio 9,131 20, ,481 31, , ,593 Directors' expeses 1, ,757 1,735 5,073 6,816 Directors' hooraria (Note 10) 1, ,544 2,671 7,504 6,683 Field audits 19, ,495 22,260 78,414 54,744 Fiacial audit 7,485 2, ,377 22,896 40,106 22,694 Isurace 1,559 1, ,617 3,617 10,396 10,397 Maagemet support 65,610 88,774 5, , , , ,104 Member fiacial reports - 40, ,981 89,081 9,693 Office ad miscellaeous ,097 2,773 1,291 Professioal fees 19,926 15, ,146 49, , ,345 Project expeditures 792,267 3,399, ,000 4,746,773 11,424,924 20,939,596 16,197,832 Project operatios ad moitorig costs 14,415 15,944 3, , , , ,464 Project review ad approval 16,340 15, , , , , ,146 3,633, ,842 5,438,168 12,018,551 22,663,606 17,888,532 (244,874) 1,366,101 (597,842) (3,183,461) (11,421,378) (14,084,454) (4,060,028) Other icome (expeses): Divideds , , ,861 1,842,065 Iterest 202, ,303 37,148 60,873 1,628,859 2,091,258 2,475,907 Loss o fair value of ivestmets (2,546,541) (5,726,256) (8,272,797) (4,723,039) Ivestmet maagemet fees (32,492) (223,725) (256,217) (353,821) 202, ,303 37,148 (2,026,541) (3,817,880) (5,442,895) (758,888) Excess (deficiecy) of reveues over expeditures $ (42,799) $ 1,528,404 $ (560,694) $(5,210,002) $(15,242,258) $ (19,527,349) $ (4,818,916) See accompayig otes to fiacial statemets. 515

18 Statemet of Chages i Net Assets Year eded March 31, 2009, with comparative figures for 2008 Net assets, begiig of year Moutai Forest Wildfire pie Icidetal Commuity resource reclamatio beetle coifer reforestatio improvemet program program program program program et assets et assets et assets et assets et assets Combied Combied (Note 3) (Note 6) (Note 5) (Note 4) $ 9,319,037 $ 4,200,073 $ 2,180,635 $ 17,665,417 $ 56,707,308 $ 90,072,470 $ 94,891,386 (Deficiecy) excess of reveues over expeditures (42,799) 1,528,404 (560,694) (5,210,002) (15,242,258) (19,527,349) (4,818,916) Net assets, ed of year $ 9,276,238 $ 5,728,477 $ 1,619,941 $ 12,455,415 $ 41,465,050 $ 70,545,121 $ 90,072,470 See accompayig otes to fiacial statemets. 16

19 Statemet of Cash Flows Year Eded March 31, 2009, with comparative figures for 2008 Icrease (decrease) i cash Operatios (Deficiecy) of reveues over expeditures $ (19,527,349) $ (4,818,916) No-cash items Loss o fair value of ivestmets 8,272,797 4,723,059 (11,254,552) (95,857) Chage i o-cash operatig workig capital Accouts receivable ad accrued iterest receivable 35,038 2,329,258 Ivetory 110,119 (5,854) Accouts payable ad accrued liabilities 2,136,527 (295,910) (8,972,868) 1,931,637) Ivestig Purchase of ivestmets (34,110,087) (46,659,266) Proceeds o sale ad redemptio of ivestmets 39,100,800 56,515,027 4,990,713 9,855,761 Net (decrease) icrease i cash (3,982,156) 11,787,398 Cash ad cash equivalets Begiig of year 22,690,789 10,903,391 Ed of year $ 18,708,633 $ 22,690,789 Supplemetal cash flow iformatio Cash is comprised of: Cash $ 9,279,293 $ 13,202,912 Restricted cash (Note 3) 9,429,341 9,487,877 See accompayig otes to fiacial statemets. $ 18,708,634 $ 22,690,789 17

20 Notes to Fiacial Statemets Year Eded March 31, Nature of operatios The Forest Resource Improvemet Associatio of Alberta (the Associatio ) is icorporated uder the Societies Act of Alberta ad has a madate uder the Forest Resources Improvemet Regulatio pursuat to the Evirometal Protectio ad Ehacemet Act ad the Forests Act to establish programs or iitiatives to ehace forest resources of Alberta ad the maagemet thereof, improve the sustaied yield of Alberta forest resources ad to promote itegrated resource maagemet. The Associatio uses Forest Resource Improvemet Associatio of Alberta dues to fud the Forest Resource Improvemet Program, which is aimed at these objectives. I 1998, per agreemet with the Provice of Alberta, the Associatio commeced admiisterig the Reclamatio of Cutblocks Destroyed by Wildfire Program (Note 3). I 2000, per agreemet with the Provice of Alberta, the Associatio commeced admiisterig the Commuity Reforestatio Program (Note 4). I 2005, per agreemet with the Provice of Alberta, the Associatio commeced admiisterig the Icidetal Coifer Program (Note 5). I 2007, per agreemet with the Provice of Alberta, the Associatio commeced admiisterig the Moutai Pie Beetle Program (Note 6). The Associatio is a ot-for-profit orgaizatio, ad accordigly, o provisio for corporate icome taxes has bee provided i these fiacial statemets pursuat to Sectio 149(1)(l) of the Icome Tax Act, Caada. 2. Summary of sigificat accoutig policies Reveue recogitio The Associatio ears dues ad levies based o the timber sales of Alberta producers. Producers are required to report timber sales ad related dues or levies by filig a timber retur with the Associatio. Reveues are recogized usig the accrual method whe amouts are measurable ad collectio is reasoably assured. Dues ad levies are based o the volume of timber produced ad are legally owig to the Associatio whe timber dues are owig to the Crow. Grat reveue is recogized i the period to which it relates uder the terms of agreemet. Ivestmet icome is recorded i the period that it is eared. The Associatio uses the restricted fud method of accoutig. Cash ad cash equivalets Cash icludes cash o had ad balaces with baks, et of outstadig cheques. Ivetory Effective April 1, 2008, the Associatio adopted the recommedatios of the CICA stadards for Ivetories, Sectio The Sectio requires the measuremet of ivetories at the lower of cost ad et realizable value ad icludes guidace o the determiatio of cost. Cost icludes all cost of purchase ad other costs icurred i brigig ivetories to their preset locatio ad coditio. The stadards also requires the reversal of previous writedows to et realizable value whe there is a subsequet icrease i the value of ivetories. The Associatio has determied that the impact of applyig the ew sectio o the fiacial statemets is ot material. Ivetory cosists of seedligs purchased ad held i storage ad beig grow i the ursery. Ivetory is valued at the lower of cost ad et realizable value. Cost is determied usig the average cost method. Ivestmets Log term Portfolio ivestmets are accouted for based o their classificatio as heldfor-tradig assets ad recorded at fair value. Chages i fair value are recogized i the statemet of reveues ad expeditures. Use of estimates I preparig the Associatio s fiacial statemets, maagemet is required to make estimates ad assumptios that affect the reported amouts of assets ad liabilities, the disclosure of cotiget assets ad liabilities at the date of the fiacial statemets ad reported amouts of reveues ad expeditures durig the period. Actual results could differ from these estimates. Fiacial istrumets The Associatio s fiacial istrumets cosist of cash, accouts receivable ad accrued iterest receivable, ivestmets ad accouts payable ad accrued liabilities. The fair values of these fiacial istrumets approximate their carryig values. Uless otherwise oted, it is maagemet s opiio that the Associatio is ot uduly exposed to sigificat iterest, currecy or credit risks from these fiacial istrumets. Additioally, the Associatio s earigs are exposed to miimal fiacial risk that arises from fluctuatios i iterest rates ad the degree of volatility of these rates. The Associatio does ot use derivative istrumets to reduce its exposure to iterest. 3. Reclamatio of Cutblocks Destroyed by Wildfire Program (the Wildfire Reclamatio Program ) The Wildfire Reclamatio Program was established o November 1, 1998 ad ameded o November 24, 2000 ad February 15, 2006 by agreemet betwee Her Majesty the Quee

21 i Right of Alberta as represeted by the Miister of Eviromet (the Provice ) ad the Forest Resource Improvemet Associatio of Alberta (the Associatio ). The Wildfire Reclamatio Program was established to ecourage the reclamatio of lad disturbed or destroyed by wildfire ad will be operated by the Associatio. Uder the terms of the agreemet, the total grat amouts to $35,000,000. The Associatio received $10,000,000 from the Provice i Jauary, 1999, $17,000,000 o May 12, 1999, $4,000,000 o December 1, 2000, ad $4,000,000 o April 23, The agreemet ( 1998 Program ) which was to expire o March 31, 2006 has bee exteded to March 31, Ay uexpeded fuds plus earigs thereo at that time will be retured to the Provice. O July 3, 2007 the Associatio etered ito a ew grat agreemet ( 2006 Program ) with the Provice. Uder the terms of the agreemet the total grat amout of $5,137,986 received i 2007 is to be used for the reclamatio of 2006 ad 2007 bured cutblocks. Durig the curret year a Aual Grat amout of $730,272 was received i accordace with the terms of this agreemet to be used for the reclamatio of 2008 bured cutblocks. The agreemet expires o March 31, 2017 uless the term of the agreemet is exteded or reewed. The obligatios of the parties cotiue for such period of time required to complete the work uder the agreemet which shall be o earlier tha seve years past the ed of the term. Ay uused grat amout shall be retured to the Provice, together with ay iterest or retur eared from ivestmet of the grat amout, seve years from the ed of the term. Restricted cash cosists of fuds that are restricted for use o the Wildfire Reclamatio Program ad held i a separate bak accout. 4. Commuity Reforestatio Program (the Reforestatio Program ) The Reforestatio Program was established o May 1, 2000 by order i coucil amedig the Timber Maagemet Regulatio pursuat to the Forest Act ad the Forest Resource Improvemet Regulatio pursuat to the Evirometal Protectio ad Ehacemet Act. The Reforestatio Program was established for reforestatio of Crow lads subject to reforestatio levies. I implemetig the program, the receipt of fuds for the Reforestatio Program has bee delegated to the Associatio i two parts: a) Reforestatio levies received ad uexpeded by the Provice o areas cut uder the authority of timber liceses ad permits o or after May 1, 1994, but before May 30, 2000 are to be trasferred to the Associatio accordig to sectio of the Timber Maagemet Regulatio. The levies received durig the year were $8,946 ( $il). b) The Associatio has the authority to collect reforestatio levies o areas cut uder the authority of timber liceses ad permits o or after May 30, The levies received durig the year were $2,245,761 ( $2,116,902). All reforestatio levies ad associated iterest are to be used solely for the purpose of the Reforestatio Program. 5. Icidetal Coifer Program The Icidetal Coifer Program was established o March 31, 2005 by agreemet betwee Her Majesty the Quee i Right of Alberta as represeted by the Miister of Sustaiable Resource Developmet (the Miister ) ad the Forest Resource Improvemet Associatio of Alberta (the Associatio ). The Icidetal Coifer Program was established to ecourage the replacemet of coiferous timber harvested as the result of ad icidetal to deciduous timber harvestig operatios ad will be operated by the Associatio. Uder the terms of the agreemet, fudig i the amout of $2,786,484 was trasferred by the Provice to the Associatio o November 16, 2005 i respect of Work to be udertake, uder cotracts, o lads set out i the Forest Maagemet Agreemet. Additioal fuds may be paid to the Associatio from time to time, represetig amouts collected by the Miister for the purposes set out i the Agreemet. I that evet, the Associatio shall admiister all additioal fuds provided i accordace with the terms of the Agreemet. The term of the Agreemet is from February 1, 2005 to March 31, Moutai Pie Beetle Program The Moutai Pie Beetle Program was established o July 5, 2007 by agreemet betwee Her Majesty the Quee i Right of Alberta as represeted by the Miister of Sustaiable Resource Developmet (the Miister ) ad the Forest Resource Improvemet Associatio of Alberta (the Associatio ). This Program was established because Moutai Pie Beetle ifestatios i Alberta reached epidemic proportios causig sigificat damage to Alberta s pie stads. Uder the terms of the agreemet the Departmet provides fudig, i the form of a grat to be used to admiister forest idustry sector operators egaged to provide services, beyod teured obligatios, to cotrol, suppress or eradicate the Moutai Pie Beetle. Uder the terms of the agreemet $5,000,000 was provided i 2007 as iitial fudig to iitiate the Program ad a additioal $5,000,000 was provided i April Aual grat amouts will be approved by the Departmet throughout the term of the Agreemet which is April 1, 2007 to March 31, 2012 uless otherwise exteded or reewed or termiated i accordace with the terms. 7. Capital disclosures Effective April 1, 2008 the Associatio has adopted the ew CICA hadbook sectio 1535 Capital Disclosures. This sectio establishes stadards for disclosig iformatio about 19

22 the Associatio s capital i order for a user of the fiacial statemets to evaluate the Associatio s objectives, policies ad processes for maagig capital. The Forest Resource Improvemet Associatio of Alberta defies capital maaged as the aggregate of et assets ad debt. The Associatio s objectives whe maagig capital are to esure that the Associatio will cotiue as a goig cocer, will sustai curret ad future operatios ad growth ad will preserve the log term value of the Associatio. 8. Future Accoutig policies Fiacial istrumets Effective April 1, 2009 the Associatio will adopt CICA hadbook sectio 3862, Fiacial Istrumets - Disclosures, ad CICA hadbook sectio 3863, Fiacial Istrumets - Presetatio. Sectio 3862 replaces the disclosure requiremets of the previous sectio 3861 Fiacial istrumets - Disclosure ad Presetatio. The ew sectio 3863 is cosistet with the previous sectio The ew stadard places a icreased emphasis o fiacial statemet disclosures cocerig risks associated with both recogized ad urecogized fiacial istrumets ad how these risks are maaged. 9. Commitmets As at March 31, 2009, the Associatio is committed to fud approved projects with various terms i the followig amouts for each program: Forest Resource Improvemet Program $19,055,212 $20,293,459 Commuity Reforestatio Program 616,586 1,459,012 Wildfire Reclamatio Program 8,052,442 8,114,439 $27,724,240 $29,866,910 I additio, subsequet to March 31 the Associatio has approved further projects i the followig amouts for each program: Forest Resource Improvemet Program $47,649 $695,178 Commuity Reforestatio Program - - Wildfire Reclamatio Program Directors hooraria As required uder the Forest Resources Improvemet Regulatio, the remueratio ad beefits paid to the members of the board of directors are as follows: James C. Bockig $2,746 $3,007 A. David Kiil 2,953 2,129 Jurge Moll 1, $7,504 $5, Fiacial Istrumets Fiacial assets ad liabilities are iitially recogized at fair value ad are subsequetly accouted for based o their classificatio as described below. The classificatio depeds o the purpose for which the fiacial istrumets were acquired ad their characteristics. Except i very limited circumstaces, the classificatio is ot chaged subsequet to iitial recogitio. Fiacial istrumets classified as held-for-tradig will be measured at fair value with chages i fair value recogized i the statemets of reveues ad expeditures. Fiacial assets classified as held-to-maturity or as loas ad receivables, or fiacial liabilities classified as other fiacial liabilities will be measured at amortized cost. Available-for-sale fiacial assets will be measured at fair values with chages i fair value beig recogized directly i the statemet of et assets. As at March 31, 2009 the Associatio has the followig fiacial istrumets: Classificatio Measuremet Fiacial assets Cash Held-for-tradig Fair value Accouts receivable ad accrued iterest receivable Loas & receivables Amortized cost Ivestmets Held-for-tradig Fair value Fiacial liabilities Accouts payable ad accrued liabilities Other fiacial Amortized cost liabilities $47,649 $695,178 20

23 Forest Resource Improvemet Associatio of Alberta Members Alberta-Pacific Forest Idustries Ltd. Alberta Plywood Ltd. ANC Timber Ltd. Askee Developmet Corporatio Blue Ridge Lumber Ic. Boucher Bros. Lumber Ltd. Caadia Forest Products Ltd. Crowsest Forest Products Daishowa-Marubei Iteratioal Ltd. Gordo Buchaa Eterprises Ltd. Hito Wood Products Ltd. Koioia Corporatio Little Red River Forestry Ltd. Maig Diversified Forest Products Medicie Lodge Timber Products Ltd. Millar Wester Forest Products Ltd. Northlad Forest Products Ltd. Rocky Wood Preservers Ltd. SEEHTA Forest Products Slave Lake Pulp Corporatio Spray Lakes Sawmills (1980) Ltd. Sprucelad Millworks Ic. Sudace Forest Idustries Sudre Forest Products Ltd. Tall Pie Timber Co. Ltd. Tolko Idustries Ltd. Vaderwell Cotractors (1971) Ltd. Weyerhaeuser Compay Limited Zama Mills Ltd. Zavisha Sawmills Ltd. Aual Report: MediaMatch West Commuicatios Ic. Studio X Desig Photo credits: MediaMatch West Commuicatios Ic. Jo Birkigt, Delaey Aderso

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