CHILDREN'S AID SOCIETY OF ALGOMA

Transcription

1 Financial Statements of CHILDREN'S AID SOCIETY OF ALGOMA Year ended March 31, 2018

2 Financial Statements Year ended March 31, 2018 Page Independent Auditors' Report Statement of Financial Position 1 Statement of Operations 2 Statement of Change in Net Assets 3 Statement of Cash Flows 4 Statement of Remeasurement Gains and Losses 5 Notes to Financial Statements 6 Schedule of Operations by Program (Unrestricted Funds) 15 Schedule of Child Welfare 16

3 KPMG LLP 111 Elgin Street, Suite 200 Sault Ste. Marie ON P6A 6L6 Canada Telephone (705) Fax (705) INDEPENDENT AUDITORS' REPORT To the Members of the Children's Aid Society of Algoma We have audited the accompanying financial statements of the Children's Aid Society of Algoma, which comprise the statement of financial position as at March 31, 2018, the statements of operations, change in net assets, cash flows and remeasurement gains and losses for the year then ended, and notes, comprising 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 public sector accounting standards, 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 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 our 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, we consider 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 is sufficient and appropriate to provide a basis for our audit opinion KPMG LLP is a Canadian limited liability pannerstlip and 8 member 1jrm of the KPMG network. of Independent member firms affiliated with KPMG Intern ational Cooperative (HKPMG International"). a Swiss entity. KPMG Canada provides services to KPMG LLP.

4 Opinion In our opinion, the financial statements present fairly, in all material respects the financial position of the Children's Aid Society of Algoma as at March 31, 2018 and its results of operations, and its cash flows and its remeasurement gains and losses for the year then ended in accordance with Canadian public sector accounting standards. Other Matter Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary information included in Schedules of Operations by Program (Unrestricted Funds) and Child Welfare is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Chartered Professional Accountants, Licensed Public Accountants Sault Ste Marie, Canada June 21, 2018

5 Statement of Financial Position March 31, 2018, with comparative information for 2017 Assets Current assets: Cash $ 1,481,771 $ 2,609,952 Accounts receivable (note 2) 92, ,441 Due from Ministry of Children and Youth Services 736, ,225 2,309,910 2,974,618 Capital assets (note 3) 3,519,937 3,690,945 Restricted: Cash and investments held in trust 1,685,114 1,659,206 Liabilities, Deferred Contributions and Net Assets $ 7,514,961 $ 8,324,769 Current liabilities: Accounts payable and accrued liabilities (note 4) $ 1,898,104 $ 2,307,772 Deferred revenue 9,006 29,140 Current portion of long-term debt (note 7) 137, ,368 2,044,892 2,467,280 Deferred capital contributions (note 5) 1,049,910 1,105,169 Interest rate swap (note 7) 68, ,880 Long-term debt (note 7} 1,138,808 1,281,357 4,302,187 4,971,686 Net assets (deficiency): Unrestricted 169, ,949 Investment in capital assets (note 6) 1,193,437 1,174,051 Restricted trust funds 1,685,114 1,659,206 3,047,594 3,237,206 Accumulated remeasurement gains 165, ,877 3,212,774 3,353,083 Contingencies (note 10) See accompanying notes to financial statements. $ 7,514,961 $ 8,324,769

6 Statement of Operations Year end March 31, 2018, with comparative information for 2017 Revenue: Province of Ontario $ 19,077,419 $ 20,612,149 Other 1,377,985 1,370,889 Government of Canada 187, ,160 Donations 8,782 8,578 Amortization of deferred capital contributions 55,259 58,167 20,706,505 22,232,943 Expenses: Salaries 10,268,295 9,890,838 Boarding rate payments 4,020,214 5,341,109 Employee benefits 2,920,879 2,849,380 Clients' personal needs 804, ,533 Transportation 506, ,291 Building occupancy 404, ,289 Office 294, ,753 Technology 284, ,816 Program 277, ,914 Health services 221, ,256 Purchased services - case related 216, ,448 RESP transfers 186,753 36,614 Amortization of capital assets 171, ,818 Training and recruiting 100,613 82,542 Miscellaneous 67,539 64,676 Purchased services - non-case related 65,337 55,701 Interest on long-term debt 64,965 76,961 Promotion and publicity 7,160 18,137 Scholarships 6,000 10,500 20,888,313 21,371,576 Excess (deficiency) of revenue over expenses before undernoted (181,808) 861,367 Prior years' funding adjustments (7,804) Excess (deficiency) of revenue over expenses $ (189,612) $ 861,367 See accompanying notes to financial statements. 2

7 Statement of Change in Net Assets Year ended March 31, 2018, with comparative information for 2017 Investment in Restricted 2018 Unrestricted capital assets trust funds Total Balance, beginning of year $ 403,949 $1,174,051 $ 1,659,206 $ 3,237,206 Excess (deficiency) excess of revenue over expenses (99,771 ) (115,749) 25,908 (189,612) Net change in investment in capital assets (note 6) (135,135) 135,135 Balance, end of year $ 169,043 $ 1,193,437 $ 1,685,114 $ 3,047, Investment in Restricted Unrestricted capital assets trust funds Total Balance, beginning of year $ (178,687) $ 1,168,277 $ 1,386,249 $ 2,375,839 Excess (deficiency) of revenue over expenses 718,061 (129,651 ) 272, ,367 Net change in investment in capital assets (note 6) (135,425) 135,425 Balance, end of year $ 403,349 $ 1,174,051 $ 1,659,206 $ 3,237,206 See accompanying notes to financial statements. 3

8 Statement of Cash Flows Year ended March 31, 2018, with comparative information for 2017 Cash flows from operating activities: Excess (deficiency) of revenue over expenses $ (189,612) $ 861,367 Adjustments for: Amortization of deferred capital contributions (55,259) (58,167) Amortization of capital assets 171, ,818 (73,863) 991,018 Change in non-cash operating working capital: Decrease in accounts receivable 145,317 20,739 Increase in due from Ministry of Children and Youth Services (608,790) (145,655) Increase (decrease) in accounts payable and accrued liabilities (409,668) 261,857 Increase (decrease) in deferred revenue (20,134) 4,131 (967,138) 1,132,090 Cash flows from financing activities: Principal payments on long-term debt (135,135) (122,183) Cash flows from capital activities: Purchase of capital assets Recei~t of deferred ca~ital contributions (110,083) 96,841 (13,242) Increase (decrease) in cash and cash equivalents (1,102,273) 996,665 Cash and cash equivalents, beginning of year 4,269,158 3,272,493 Cash and cash equivalents, end of year $ 3,166,885 $ 4,269,158 Cash and cash equivalents are defined as follows: Cash $ 1,481,771 $ 2,609,952 Cash and investments held in trust 1,685,114 1,659,206 $ 3,166,885 $ 4,269,158 See accompanying notes to financial statements. 4

9 Statement of Remeasurement Gains and Losses Year end March 31, 2018, with comparative information for 2017 Accumulated remeasurement gains, beginning of year $ 115,877 $ 64,951 Unrealized gains attributable to: Derivative - interest rate swap (note 7) 49,303 50,926 Accumulated remeasurement gains, end of year $ 165,180 $ 115,877 See accompanying notes to financial statements. 5

10 Notes to Financial Statements Year ended March 31, 2018 The Children's Aid Society of Algoma (the "Society") is incorporated without share capital under the Ontario Business Corporations Act. The Society promotes the well-being of children in Algoma in a manner which reflects the community's standards and the intent of the related legislation under the Child and Family Services Act of Ontario. The Society is a registered charity under the Income Tax Act and, accordingly, is exempt from income taxes. 1. Significant accounting policies: a) Basis of accounting: The financial statements have been prepared by management in accordance with Canadian public sector accounting standards including the 4200 standards for government not-for-profit organizations. b) Revenue recognition: The Society follows the deferral method of accounting for contributions. Under the Child and Family Services Act of Ontario and regulations thereto, the Society is primarily funded by the Province of Ontario in accordance with budget arrangements established by the Ministry. Operating grants are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in that subsequent period. These financial statements reflect agreed arrangements approved by the Ministry with respect for the year ended March 31, Contributions restricted for the purchase of capital assets are deferred and amortized into revenue at a rate corresponding with the amortization rate for the related capital asset. Revenue is subject to review by the Ministry and adjustments, if any, arising therefrom will be reflected in the period in which such adjustments are so determined. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. 6

11 Notes to Financial Statements Year ended March 31, Significant accounting policies (continued): c) Capital assets Capital assets are recorded at cost. Capital assets are amortized on the declining-balance or straight-line basis using the following annual rates: Buildings 5% Computer equipment and computer equipment under capital lease 30% Furniture and equipment 20% Automotive equipment 30% Leasehold improvements 5 years d) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Derivative instruments and equity instruments that are quoted in an active market are reported at fair value. All other financial instruments are subsequently recorded at cost or amortized cost unless management has elected to carry the instruments at fair value. Management has elected to record all investments at fair value as they are managed and evaluated on a fair value basis. Unrealized changes in fair value are recognized in the statement of remeasurement gains and losses until they are realized, when they are transferred to the statement of operations. Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the straight-line method. All financial assets are assessed for impairment on an annual basis. When a decline is determined to be other than temporary, the amount of the loss is reported in the statement of operations and any unrealized gain is adjusted through the statement of remeasurement gains and losses. When the asset is sold, the unrealized gains and losses previously recognized in the statement of remeasurement gains and losses are reversed and recognized in the statement of operations. Long-term debt is recorded at cost. The related interest rate swap is recorded at fair value. 7

12 Notes to Financial Statements Year ended March 31, Significant accounting policies (continued): d) Financial instruments (continued): Financial instruments are classified into fair value hierarchy Levels 1, 2 or 3 for the purposes of describing the basis of the inputs used to determine the fair market value of those amounts recorded a fair value, as described below: Level 1 Level 2 Fair value measurements are those derived from quoted (unadjusted) in active markets for identical assets or liabilities prices Fair value measurements are those derived market-based inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly Level 3 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data All financial instruments are Level 1 except for the interest rate swap which is Level 2 (see note 7). e) Use of estimates: The preparation of financial statements in conformity with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the year in which they become known. f) Employee future benefits: The Society is an employer member of the Ontario Municipal Employees Retirement Fund ("the Plan") which is a multi-employer, defined benefit pension plan. The Society has adopted defined contribution plan accounting principles for this Plan because insufficient information is available to apply defined benefit plan accounting principles. 8

13 Notes to Financial Statements Year ended March 31, Accounts receivable: Commodity tax rebate $ 62,493 $ 114,960 Other accounts receivable 29, ,481 There is no allowance for doubtful accounts. $ 92,124 $ 237, Capital assets: 2018 Accumulated Net book Cost amortization value Land $ 703,214 $ $ 703,214 Buildings 5,507,154 2,777,164 2,729,990 Computer equipment 1,066,887 1,048,608 18,279 Furniture and equipment 733, ,944 55,144 Automotive equipment 228, ,244 13,310 $ 8,238,897 $ 4,718,960 $ 3,519, Accumulated Net book Cost amortization value Land $ 703,214 $ $ 703,214 Buildings 5,507,154 2,663,480 2,873,674 Computer equipment 1,066,887 1,040,775 26,112 Furniture and equipment 733, ,158 68,930 Automotive equipment 228, ,539 19,015 Leasehold improvements 20,703 20,703 $ 8,259,600 $ 4,568,655 $ 3,690,945 9

14 Notes to Financial Statements Year ended March 31, Accounts payable and accrued liabilities: Employee related $ 811,325 $ 764,680 Government remittances 157, ,785 Trade 929,416 1,227,307 $ 1,898,104 $ 2,307, Deferred capital contributions: Deferred capital contributions represent the unamortized amount of contributions received for the purchase of capital assets. Balance, beginning of year $ 1,105,169 $ 1,066,495 Additions to deferred capital contributions 96,841 Less: amounts amortized to revenue (55,259) (58,167) Balance, end of year $ 1,049,910 $ 1,105, Investment in capital assets: (a) Investment in capital assets is calculated as follows: Capital assets $ 3,519,937 $ 3,690,945 Amounts financed by: Deferred capital contributions (1,049,910) (1,105,169) Long-term debt (1,276,590) (1,411,725) $1,193,437 $ 1,174,051 10

15 Notes to Financial Statements Year ended March 31, Investment in capital assets (continued): (b) Change in net assets invested in capital assets is calculated as follows: Excess of revenues over expenses: Amortization of deferred capital contributions $ 55,259 $ 58,167 Amortization of capital assets (171,008) (187,818) $ (115,749) $ (129,651 ) Investment in capital assets: Purchase of capital assets $ $ 110,083 Amounts funded by: Principal payments on long-term debt 135, ,183 Deferred capital contributions (96,841) $ 135,135 $ 135, Long-term debt: 4.45% Mortgage payable at $43,500 quarterly, including interest, maturing September 25, 2029 $ 1,085,000 1,201,000 10% Mortgage payable at $884 monthly, including interest, maturing February 1, ,091 95, % Mortgage payable at $1,242 monthly, including interest, maturing April 30, , ,210 1,276,590 1,411,725 Less current portion (137,782) (130,368) $ 1,138,808 1,281,357 11

16 Notes to Financial Statements Year ended March 31, Long-term debt (continued): i) The mortgage payable, maturing September 25, 2029, is secured by a first fixed charge on the land, building and improvements to which it relates and a general security agreement in all assets of the Society except other real property. To reduce the interest rate cash flow risk on this mortgage, the Society has entered into an interest rate swap contract that entitles the Society to receive interest at floating rates on the notional principal amount and obliges it to pay interest at a fixed rate of 4.45% over the entire term of the mortgage. The net interest receivable or payable under contract is settled quarterly with the counterparty, which is a Canadian chartered bank. The fair value of the interest rate swap at March 31, 2018 is $(68,577) ( $(117,880)). ii) The 10% mortgage is secured by two residences owned by the Society. Subject to certain restrictions, portions of the principal and the interest are forgiven as follows: a) $14,234 principal over the life of the mortgage as a Federal Capital contribution. b) $198 per month as a Federal Interest Reduction Grant which results in an effective interest rate of 8%. iii) The 3.8% mortgage is secured by a first fixed charge on the land and building which it relates. Principal due on the long-term debt is as follows: 2018 $ 137, , , , ,111 Thereafter 516, Pension plan: The Society's employees are members of the Ontario Municipal Employees' Retirement System defined benefit pension plan which is a multi-employer plan. The contributions during the year were $1,058,336 ( $1,083,237). 12

17 Notes to Financial Statements Year ended March 31, Trust funds: The Board of Directors internally restricts resources for scholarship and orphan trust purposes and such trust funds are not available for unrestricted purposes without the approval of the Board. Also included in the trust funds are funds received for the Universal Child Care Benefit. The activity of the trust fund is as follows: Revenue: Donations $ 8,782 $ 8,578 Universal Child Care Benefit 187, ,160 Ontario Child Benefit 192, ,823 Other 65, , , ,633 Expenses: Scholarships 6,000 10,500 RESP transfers 186,753 36,614 Ontario Child Benefit Fund programming 235, , , ,676 Excess of revenue over expenses $ 25,908 $ 272, Contingencies: The Society is involved in certain legal matters and litigation, the outcome of which are not presently determinable. Accordingly, no provision has been made for losses, if any, in these financial statements. Should any loss result, such loss will be accounted for in the period in which it is determined. Management is of the opinion that these matters may be mitigated by adequate insurance coverage. 13

18 Notes to Financial Statements Year ended March 31, Financial risks and concentration of credit risk: (a) liquidity risk liquidity risk is the risk that the Society will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Society manages its liquidity risk by monitoring its operating requirements. The Society prepares budget and cash forecasts to ensure it has sufficient funds to fulfill its obligations. There has been no change to the risk exposures from (b) Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The Society is exposed to credit risk with respect to the accounts receivable. The Society assesses, on a continuous basis, accounts receivable and provides for any amounts that are collectible in the allowance for doubtful accounts. (b) I nterest rate risk: The Society is exposed to interest rate risk on its fixed interest rate financial instruments. Further details about the fixed rate long-term debt are included in note 7. 14

19 Schedules of Operations by Program (Unrestricted Funds) Year ended March 31, 2018, with comparative information for 2017 Preparation for Child We~are Partner Faciliti Renewal Other Programs Inde~endence Total Total Revenue: Province of Ontario Other income 18,774,160 1,186,970 20,259,381 1,161,420 53, , ,397 90,186 90,186 $ 18,864,346 1,332,485 20,403,326 1,269,817 19,961,130 21,420,801 53, , ,397 90,186 90,186 20,196,831 21,673,143 Expenses: Salaries Boarding rate payments Employee benefits Clients' personal needs Transportation Building occupancy Office Technology Health services Purchased services - case related Training and recruiting Miscellaneous Purchased services - non-case related Interest on long-tenm debt Program Promotion and publicity 10,167,756 4,020,214 2,900, , , , , , , ,337 64,965 9,102 7,160 9,794,210 5,341,109 2,828, , ,701 76, ,411 33, , ,437 29, ,357 39,500 1,047 24,583 67,440 20, ,440 20, ,268,295 4,020,214 2,920, , , , , , , , ,160 9,890,838 5,341,109 2,849, , , , ,961 29,352 18,137 20,056, ,088 53, , ,288,798 20,955,082 Excess (deficjency) of revenue over expenses before undemoted (95,314) 717, ,347 (91,967) 718,061 Prior years' funding adjus1ments (7,804) (7.804) Excess (deficiency) of revenue over expenses (95,314) (7.804) $ (99,771)

20 Schedules of Child Welfare Year ended March 31, 2018, with comparative information for 2017 Targeted Subsidies Total Total Core and Volume Funding Revenue: Ministry funding - Core $ 18,541,802 $ $ 18,541,802 $ 20,082,706 Ministry funding - Targeted Subsidies 232, , ,675 Revenue and expenditure recoveries 1,186,970 1,186,970 1,161,420 19,728, ,358 19,961,130 21,420,801 Expenses: Salaries and wages Benefits Boarding rate payments: Foster care Group care Client's personal needs Travel Building occupancy Office administration Technology Health and related Professional services - client Training and recruitment Miscellaneous Professional services - non-client Interest on long-term debt Program Promotion and publicity 10,167,756 10,167,756 9,794,210 2,900,126 2,900,126 2,828,554 2,678,886 2,678,886 3,037,001 1,341,328 1,341,328 2,304, , , , , , , , , , , , , , , , , , , , , , , ,602 81,495 67,539 67,539 64,676 65,337 65,337 55,701 64,965 64,965 76,961 9,102 9,102 4,769 7,160 7,160 18,137 19,822, ,910 20,056,444 20,703,088 Excess (deficiency) of revenue over expenses before year end settlements $ (93,762) $ (1,552) $ (95,314) $ 717,713 16