CONDOMINIUM CORPORATION NO (RIVERSIDE TOWERS I) FINANCIAL STATEMENTS OCTOBER 31, ri8ia4

Transcription

1 FINANCIAL STATEMENTS OCTOBER 31, 2015 II ri8ia4

2 wr WILLIAM D. NELSON, B.Comm., C.A. * Denotes Professional Corporation #330 WESTMOUNT COURT 5010 RICHARD ROAD S.W. CALGARY, ALBERTA T3E 6L1 TELEPHONE (403) FAX (403) nelsonco@telus.net INDEPENDENT AUDITOR'S REPORT To the Owners of: Condominium Corporation No (Riverside Towers I) We have audited the accompanying financial statements of Condominium Corporation No (Riverside Towers I), which comprise the statement of financial position as at October 31, 2015, and the statements of current and capital replacement reserve fund operations and changes in net assets, and cash flows for the year then ended, 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 auditor'sjudgment, 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.

3 We believe that the audit evidence we have obtained 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 Condominium Corporation No (Riverside Towers I) as at October 31, 2015, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. t oo Calgary, Alberta February 16, 2016 CHARTERE rjj

4 :08:38a.m /2 CONDOMINIUM CORPORATION NO STATEMENT OF FINANCIAL POSITION october31, Operating Reserve Fund Fund Total Total CURRENT ASSETS Cash S S - S 142,279 S 158,777 Condominium fees receivable (Note 2) 19,697-19,691 20,195 Special assessments receivable (Note 2) ,077 Accounts receivable other 2,147-2,147-1nterfind receivable - 110, , ,044 Prepaid expense 7,567-7,567 6, , , , ,765 INVESTMENTS (Note 3) Cash - 260, , ,918 S 171,690 S S 542,785 S 651,683 CURRENT LIABILITIES Accounts payable and accrued liabilities $ 79,865 S 14,124 S 93,989 $ 220,351 interfund payable , , , , ,395 NET ASSETS Operating Fund ( 18,510) - ( 18,510) ( 49,714) Reserve Fund (Note 6) - 356, , ,002 18,510) 356, , ,288 APPROVED BY THE B OARD: S 171,690 S 371,095 S 542,785 S 651,683 Contingent liability (Note 8) Litigation (Note 9) Director /f Director See Accompanying Notes. n 9.

5 STATEMENT OF CURRENT OPERATIONS AND CHANGES IN NET ASSETS REVENUE Condominium fees $ 1,240,205 $ 1,179,910 Less: allocated to capital replacement find 250, , , ,610 Rental income 68,708 65,652 Interest and other recoveries 14,601 12,094 1,073,514 1,018,356 IILi iu144 Dil fj Legal and audit 5,775 6,300 Management fees 53,550 53,235 Office expenses and miscellaneous 19,493 18,700 OPERATING EXPENSE Security and alarm 5,910 7,244 Elevator maintenace and repair 29,486 24,771 Utilities - electricity 166, ,767 -waterandsewer 64,191 64,109 - waste removal and recycling 11,685 11,676 - natural gas 75, ,492 Janitorial 76,094 75,058 Concierge 154, ,908 Caretaker 60,237 61,177 MAINTENANCE EXPENSE Landscaping and improvements 18,615 23,059 Snow removal 12,379 14,007 General maintenance and repair 113, ,535 Plumbing, mechanical and electrical maintenance and repair 128, ,693 OTHER Insurance and appraisal 45,698 38,596 1,042,310 1,136,327 F EXCESS (DEFICIENCY) OFREVFNUEOVER EXPENSE 31,204 ( 117,971) Operating fund net assets beginning of year ( 49,714) 68,257 OPERATING FUND NET ASS ETS END OFYEAR S ( 18,510) $ ( 49,714) See Accompanying Notes.

6 STATEMENT OF CAPITAL REPLACEMENT RESERVE OPERATIONS AND CHANGES IN NET ASSETS REVENUE Reserve assessments $ 250,000 $ 239,300 Special assessment (Note 4) - 190,560 Interest 2,818 6, , ,136 EXPENSE Brick restoration 82, ,450 Engineering inspections and reports 17,920 44,049 Plumbing and mechanical replacements 77,225 1,178 Post tension cable replacements - 72,115 Reserve fund study 12,151 - Window replacements and resealing , ,792 EXCESS FDEITCJINCY) OF REVENUE OVER EXPENSE 61,969 ( 245,656) Reserve fund net assets beginning of year 295, ,658 RESERVE FUND NE!' ASS EL'S END OF YEAR (Note 6) $ 356,971 $ 295,002 See Accompanying Notes. p.

7 STATEMENT OF CASH FLOWS CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Excess (deficiency) of revenue over expenses Operating fund $ 31,204 $ ( 117,971) Capital replacement reserve fund 61,969 ( 245,656) 93,173 ( 363,627) Add (deduct) change in Accounts receivable 51,428 ( 58,791) Prepaid expense ( 895) 19,195 Accounts and other payables ( 126,362) 137,937 Deferred revenue ,344 ( 265,286) INVESTMENT ACTiVITIES Add (deduct) change in Investments ( 33,842) 334,652 INCREASE(DECREASE) IN CASH ( 16,498) 69,366 Cash position beginning of year 158,777 89,411 CASH POSH1ON END OFYEAR $ 142,279 S 158,777 See Accompanying Notes.

8 NOTES TO THE FINANCIAL STATEMENTS PURPOSE OF ORGANIZATION The Corporation was incorporated under the provisions of the Condominium Property Act of Alberta. The Corporation is a non-profit organization that was created to collect assessment fees from unit holders for payment of common expenses as outlined in the bylaws of the Corporation. The financial statements include only the assets, liabilities, revenues and expenses relating to the operations of Condominium Corporation No The statements do not include the cost of land or buildings and the outstanding principal balances owing on mortgages which are the responsibility of the owners. Income taxes are not provided for since the Condominium Corporation is not taxable. 1. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadian accounting standards for notfor-profit organizations. a) Fund Accounting The Corporation follows the restricted fund method of accounting for contributions. The current operations fund ("operating fund") accounts for the Corporation's operating and administrative activities. The capital replacement reserve fund ("reserve fund") reports the fee assessments from owners that are to be set aside and used for the future costs of roofing, painting, major landscaping or building component replacements. b) Revenue and Expense Recognition Condominium fee assessments related to general operations are recognized as revenue of the operating fund as billed to the owners by the Corporation. Billings for the condominium fees consist of estimates of monthly charges based on approved budgets. All expenses are recognized as incurred. Restricted condominium fees related to the capital replacement reserve fund are recognized as revenue of the reserve fund. Investment income on investments held for the capital replacement reserve is recognized as revenue of the reserve fund. Unrestricted interest income is recognized as revenue of the operating fund. C) Contributed Services Volunteers contribute their time to assist the Corporation in carrying out its operating activities. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements. d) Use of Estimates The preparation of the Corporation's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Reserve fund contributions are determined by independently prepared reserve fund studies which are based on estimates of the future life of building components. Actual results could differ from those estimates. IF

9 NOTES TO THE FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES (continued) e) Equipment The Corporation expenses all equipment as it is purchased, as the cost of individual pieces of equipment is not significant. f) Cash and Cash Equivalents Cash consists of bank balances and term certificates with maturities or redemption privileges of three months or less. g) Financial Instrument Measurement The Corporation initially measures its financial assets and financial liabilities at fair value. It subsequently measures all its financial assets and financial liabilities at amortized cost. 2. RECEIVABLES The condominium corporation will register caveats on owner's condominium units where owners fail to honor fee assessments for condominium fees and special assessments. This procedure ensures all fee assessments will be collected. No impairments of other receivables or recoveries of previously provided for accounts were recorded during the year. 3. INVESTMENTS The cash investments are reflected on the financial statements at cost and are held for the purpose of financing the future costs of major repair and replacement. 4. CAPITAL REPLACEMENT RESERVE ALLOCATION Under the By-laws of Condominium Corporation No , amounts may be allocated out of fee assessments levied toward a capital replacement reserve fund to cover future costs of major repair and replacement. The allocation is based on the annual budget approved by the Board of Directors. In 2015, $250,000 ($239,300 in 2014) was set aside for the costs of roofing, painting, major equipment and building component replacements. Additionally, in March 2014 the Board approved a special assessment on Tower unit owners for the brick restoration project in the amount of $190, INCOME TAXES The Corporation is not exempt from income taxes under the Income TaAct; however, Canada Revenue Agency is prepared to regard any "profits" realized by the corporation from its member activities as reductions of members' contributions towards the operation of the condominium property and not as taxable income of the corporation or its members. Accordingly, no provision for income taxes has been made in these financial statements (Note 9). -

10 NOTES TO THE FINANCIAL STATEMENTS 6. ADEQUACY OF CAPITAL REPLACEMENT RESERVE FUN]) An independent reserve fund study to determine the adequate amount of funds which should be retained in the capital replacement fund for future cost of major repair and replacement was completed in The study projects the reserve fund should have a present balance of $398,502 with future annual contributions from the owners of $280,000 in 2016 increasing by 12% annually for five years, $453,700 in 2021 increasing by 3% annually thereafter. The Board of Directors will utilize the reserve fund study together with such other information as is available in evaluating reserve requirements. Actual capital replacement reserve fund requirements could differ from those anticipated, and therefore future special assessments cannot be precluded. The reserve fund study is available to the reader and should be examined to fully comprehend both the purpose and the assumptions of the study. 7. FINANCIAL INSTRUMENTS Transacting in financial instruments exposes the Corporation to certain financial risk and uncertainties. These risks include: a) Credit Risk The Corporation is exposed to credit risk from condominium unit owners who fail to honor fee assessments. The risk is mitigated as the Condominium Corporation will place a caveat on units that fail to meet their obligations. As there are many units to the condominium the concentration of credit risk is minimized. b) Liquidity Risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities and reserve fund requirements for sufficiency. The operating and reserve funds each have substantial funding shortfalls. The Corporation will have to increase condominium fees and special assess the owners to provide sufficient funds for the reserve fund and the operating fund to meets their obligations. 8. CONTINGENT LIABILITY The Corporation receives telecommunication revenues arising from cell tower leases. Canada Revenue Agency may take the view that telecommunication rental are not funded by the condominium owners and are a purely "for profit" activity with the proceeds being used to reduce the cos of operating the condominium corporation. If the rental activity is judged by tax authorities as being a for profit business activity it may put the Condominium Corporation's tax- exempt status at risk. Alternatively the cell tower rentals could be treated as taxable income. Good and services tax implications also may arise. 9. LITIGATION Statements of Claim have been filed naming the Condominium Corporation, in addition to other defendants, for slip and fall accidents alleged to have occurred. The outcome is not determinable at this time. Liability to the corporation, if any, should be limited to the deductible under the insurance policy. A1IZ