Concordia University. Financial Statements. May 31, 2009

Transcription

1 Financial Statements Auditors' Report 2-3 Financial Statements Balance Sheet 4 Operations 5 Changes in Fund Balances 6 Changes in Financial Position

2 Auditors' Report To the Board of Governors of Concordia University Raymond Chabot Grant Thornton LLP Suite 2000 National Bank Tower 600 De La Gauchetière Street West Montréal, Québec H3B 4L8 Telephone: Fax: We have audited the balance sheet of the Operating Fund, the Restricted Funds and the Capital Assets Fund of Concordia University as at and the statements of operations and changes in fund balances of the Operating Fund, the Restricted Funds and the Capital Assets Fund and changes in financial position of the Capital Assets Fund for the year then ended. These financial statements have been prepared to meet the exclusive requirements of the University's directors, the Ministère de l'éducation, du Loisir et du Sport du Québec, banking institutions and bond holders. These financial statements are the responsibility of the University's management. 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 plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the University as at and the results of its operations and the changes in the financial position of the Capital Assets Fund for the year then ended in accordance with the accounting policies set out in Note 3. Chartered Accountants Member of Grant Thornton International Ltd

3 3 These financial statements, which have not been, and were not intended to be, prepared in accordance with Canadian generally accepted accounting principles (Note 3), are solely for the information and use of the directors of the Concordia University, the Ministère de l'éducation, du Loisir et du Sport du Québec, banking institutions and bond holders. The financial statements are not intended to be and should not be used by anyone other than the specified users or for any other purpose. Montréal, September 29, Chartered accountant auditor permit no

4

5 5 Concordia University Operations Year ended Restricted Funds Total Funds Operating Fund Research Fund Designated Fund Capital Assets Fund $ $ $ $ $ $ $ $ $ $ Revenue Tuition fees 75,914 70,428 75,914 70,428 Subsidies Quebec government 249, , , ,501 4,577 5, ,410 29,976 Government of Canada 29,073 27,897 4,392 4,202 23,897 21, ,390 Other Grants from other sources 4,482 6,069 3,822 5, Miscellaneous fees and other income 28,419 29,488 27,099 26, ,222 2, Gain on disposal of assets 1,032 1,032 Services to the community 7,743 7,587 7,743 7,587 Student services 13,664 13,109 13,664 13,109 Ancillary services (Note 13) 18,232 18,526 18,232 18,526 Rental properties 4,828 5,116 4,828 5,116 Donations 7,971 8, ,276 8, Concordia University Foundation 5,304 9,857 2,309 1,752 2,995 6,876 1,229 Net investment income , , , ,533 32,523 32,532 13,155 19,898 30,143 34,308 Expenses Academic services (Note 14) 217, , , ,012 Administrative services (Note 14) 80,272 83,219 80,272 83,219 Research 39,814 39,672 8,944 9,954 30,870 29,718 Services to the community 7,308 7,486 7,308 7,486 Student services 13,742 13,075 13,742 13,075 Ancillary services (Note 13) 17,341 18,331 17,341 18,331 Rental properties 3,153 3,049 3,153 3,049 Specified gift to Concordia University Foundation 3,036 7, ,036 6,411 Interest on bank loans 4,560 4,553 2,583 1,500 1,977 3,053 Interest on long-term debt 14,309 14,027 14,309 14,027 Bond and brokerage fees 13,783 13,902 11,589 10,658 2,194 3,244 Amortization 31,777 29,039 31,777 29,039 Endowed and restricted projects 8,342 8,995 8,342 8, , , , ,124 30,870 29,718 11,378 15,406 50,257 49,363 (9,607) (22,340) 7,077 (14,591) 1,653 2,814 1,777 4,492 (20,114) (15,055) Capital expenditures financed by other funds 13,422 12,797 13,422 12,797 Excess (deficiency) of revenue over expenses 3,815 (9,543) 7,077 (14,591) 1,653 2,814 1,777 4,492 (6,692) (2,258) The accompanying notes are an integral part of the financial statements.

6 6 Concordia University Changes in Fund Balances Year ended Restricted Funds Total Funds Operating Fund Research Fund Designated Fund Capital Assets Fund $ $ $ $ $ $ $ $ $ $ Fund balances (negative), beginning of year 68, ,793 (16,828) 1,997 33,812 30,998 17,087 12,595 34, ,203 Other adjustments to fund balances Prior years' adjustment on capital assets amortization (Note 2) (78,463) (78,463) Prior years' adjustment (Note 2) 579 (3,655) 579 (3,655) 579 (82,118) 579 (3,655) (78,463) Fund balances (negative), beginning as restated 69,132 78,675 (16,249) (1,658) 33,812 30,998 17,087 12,595 34,482 36,740 Excess (deficiency) of revenue over expenses 3,815 (9,543) 7,077 (14,591) 1,653 2,814 1,777 4,492 (6,692) (2,258) Fund balances (negative), end of year 72,947 69,132 (9,172) (16,249) 35,465 33,812 18,864 17,087 27,790 34,482 The accompanying notes are an integral part of the financial statements.

7 Changes in Financial Position Year ended 7 Financing and investing activities Capital Assets Fund $ $ SOURCES OF CASH Subsidies 29,896 33,316 Bonds and brokerage fees 7,512 Gain on sale of fixed assets 1,032 Other contributions 900 1,436 Long-term debt issuance 116,193 19,087 Interfunds transfers 51, , ,724 USES OF CASH Capital assets acquisition (55,157) (67,037) Interest (15,945) (15,534) Bonds and brokerage fees (2,269) Repayment of long-term debt (58,587) (31,153) Interfunds transfers (15,031) (146,989) (113,724) Net change in cash position and cash position, end of year The accompanying notes are an integral part of the financial statements.

8 8 1 - STATUTES AND NATURE OF OPERATIONS The University was incorporated under the Concordia University Act, S.Q c.91, as amended by S.Q , c. 191 and S.Q. 2006, c. 69. The mission of the University includes post-secondary and graduate education, research and public service. The University is a registered charity and under section 149 of the Income Tax Act, is exempt from the payment of income tax. 2 - ACCOUNTING CHANGES Asset capitalization policy In July 2008, the Contrôleur des finances, in collaboration with the Ministère de l'éducation, du Loisir et du Sport (MELS), published the Politique de capitalisation des immobilisations pour les établissements du réseau de l'éducation et de la santé et des services sociaux. Although the new policy is effective June 1, 2009, the University decided to implement it for the fiscal year beginning June 1, The amended accounting policies relate to the amortization methods, rates and periods for certain capital assets, and the University restated the prior years financial statements. The details of these changes are as follows: May 31, 2008 Periods and Method Periods Methods rates Buildings Straight-line 40 to Diminishing 2% 50 years balance Building alterations Straight-line 25 to Diminishing 2% 40 years balance Furniture and equipment Straight-line 3 to 15 years Straight-line 5 to 8 years Library collection Straight-line 10 years Straight-line 40 years The impact of this change on the financial results for the year ended is an increase of $1,728 (a decrease of $3,144 in 2008) of the capital asset amortization expense and a decrease in the fund balance of the Capital Assets Fund of $77,047 ($75,319 in 2008). Externally restricted contributions In September 2009, the MELS published the Cahier des définitions, des termes et des directives de présentation du rapport financier annuel A change was made to the accounting policy allowing the use of the deferral accounting method to account for restricted contributions received from the MELS in the Operating Fund. The University restated the prior years' financial statements. The impact of this change on the financial results for the year ended, is a decrease in subsidies revenues of $1,903 ($1,175 in 2008), an increase in unearned revenue and a decrease in the externally restricted fund balances of $6,733 ($4,830 in 2008).

9 9 2 - ACCOUNTING CHANGES (Continued) Subsidies receivable During the year, the University recorded a subsidy receivable from the MELS resulting from a reclassification process of the courses, according to Clarder codes. This subsidy is related to the previous fiscal year. Therefore, the University restated the prior year's financial statements. The impact of this change on the financial results for the year ended May 31, 2008 is an increase in subsidies revenues from Québec government of $579, an increase in subsidies receivable and an increase in fund balance of the same amount. Recently adopted standard Capital disclosures On June 1, 2008, in accordance with the applicable transitional provisions, the University applied the recommendations of Section 1535, "Capital Disclosures", of the Canadian Institute of Chartered Accountants' Handbook (CICA Handbook) relating to non-publicly accountable enterprises. The new recommendations, effective for fiscal years beginning on or after October 1, 2007, require that such organizations, with externally imposed capital requirements, disclose information that enables users of their financial statements to evaluate the effect of those requirements. The new accounting standard only addresses disclosures and has no impact on the University's financial results. Future accounting standards Conversion to Canadian generally accepted accounting principles The MELS has prescribed Quebec universities to prepare their financial statements for the year ending May 31, 2010 in accordance with Canadian generally accepted accounting principles rather than preparing them in accordance with the guidelines prescribed in the Cahier des définitions, des termes et des directives de présentation du rapport financier annuel, published by the MELS for Quebec universities. This new requirement was initially supposed to be implemented during this fiscal year, however following a decision taken by the MELS, the implementation was postponed to The University's management has not yet measured the impact that the application of these new standards will have on the financial statements. Not-for-profit organizations In September 2008, the Canadian Institute of Chartered Accountants (CICA) amended the introduction to accounting standards that apply only to not-for-profit organizations and several sections in the 4400 series as well as consequential changes to other sections of the CICA Handbook. The main changes affect the following, in particular: Inclusion of not-for-profit organizations within the scope of Sections 1540, "Cash Flow Statements", and 1751, "Interim Financial Statements"; Amendments to clarify that revenues and expenses must be recognized and presented on a gross basis when the not-for-profit organization is acting as a principal in the transactions in question.

10 ACCOUNTING CHANGES (Continued) The CICA also published new Section 4470, "Disclosure of Allocated Expenses by Not-for-profit Organizations", which establishes disclosure standards for the not-for-profit organization that classifies its expenses by function and allocates expenses to a number of functions to which the expenses relate. These changes are effective for fiscal years beginning on or after January 1, 2009 and the University will implement them as of June 1, The University's management has not yet measured the impact that the application of these changes will have on the financial statements. 3 - ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (A) ACCOUNTING POLICIES Basis of presentation The financial statements are prepared using the historical cost method, except for certain financial instruments that are recognized at fair value. No information on fair value is presented when the carrying amount corresponds to a reasonable approximation of the fair value. The financial statements have been prepared in accordance with the accounting principles of the Cahier des définitions, des termes et des directives de présentation du rapport financier annuel for Quebec universities from the MELS. In the absence of specific guidance from the MELS, the University complies with accounting standards recommended by the CICA, in particular those relating to non-profit organizations. Accounting estimates The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires the University's management to make estimates and assumptions that affect the amounts recorded in the financial statements and notes to financial statements. These estimates are based on management's best knowledge of current events and actions that the University may undertake in the future. The main estimates relate to tuition fee's doubtful accounts, amount payable to the MELS for student enrolment, accrual for collective agreement settlements, useful life of capital assets, grants from the MELS that are not confirmed and various accrued liabilities. Actual results may differ from these estimates. Fund accounting The University follows the restricted fund method of accounting for contributions. The Operating Fund accounts for the University's academic and administrative activities. This fund reports unrestricted resources as well as internally restricted resources.

11 ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) The Research Fund reports externally restricted resources that are used for research and research-related purposes. The Designated Fund is used to account for funds received from external entities for specific purposes imposed by the outside donor or party. The Capital Assets Fund reports the assets, liabilities, revenues and expenses related to the capital assets owned and managed by the University. These include the cost of capital assets purchased, funded and expensed by other funds in the year of acquisition. Financial assets and liabilities The University has chosen to apply the recommendations of Section 3861, "Financial Instruments Disclosure and Presentation", of the CICA Handbook with respect to the presentation and disclosure of financial instruments. On initial recognition, all financial assets and liabilities are measured and recognized at their fair value. Transaction costs from loans and receivables increase the carrying amount of the related financial assets. Transaction costs from other financial liabilities reduce the carrying amount of the related financial liabilities. Subsequently to the initial recognition, financial assets and liabilities are measured and recognized as follows: Cash: held-for-trading financial assets Marketable securities: classified as held-for-trading financial assets Subsidies receivable, accounts receivable, amount receivable from the MELS and due from Concordia University Foundation: loans and receivables Bank overdraft, bank loans, accounts payable and accrued liabilities, amount payable to the MELS, interest payable on long-term debt and long-term debt: other financial liabilities Held-for-trading financial assets and liabilities Held-for-trading financial assets and liabilities are measured at their fair value and changes in fair value are recognized in the statement of operations. Changes in fair value that are recognized in the statement of operations include interest and dividend income, exchange gains or losses and realized and unrealized gains or losses, and are presented under Net investment income. Loans and receivables, and other financial liabilities Loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method (including any impairment in the case of financial assets). Interest calculated using the effective interest method is presented in the statement of operations under Net investment income or Interest expenses as appropriate.

12 ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) Internally restricted fund balance The internally restricted fund is used for two types of transactions: The University has adopted a policy to internally restrict the Operating Fund balance for unspent amounts relating to specific programs. The programs covered by this policy are described in Note 12; Management has chosen to internally restrict from the Operating Fund unspent budgeted amounts relating to specific key University priorities. Accounting practices for certain transactions The subsidy revenue includes subsidies, contracts and sponsorships received with respect to the nature of operations of the University; post-secondary and graduate education, research and public service. The subsidies recognized as revenue in the Operating Fund are recognized in revenue according to the MELS requirements and any adjustments to previous years' subsidies are included in the statement of operations in the year they are definite including the adjustments made with respect to the student enrolment. Unrestricted contributions are recognized as revenue of the Operating Fund in the year received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Externally restricted contributions accounted for in the Operating Fund are deferred and recognized as revenue in the period in which the related expenses are incurred. Tuition and student services fees, including continuing education, are recorded as revenue in the financial year in which the course sessions are held. Tuition fees collected for course sessions to be held in the next financial year are accounted for as unearned revenue. Ancillary services revenues are recorded in the Operating Fund in the year the sales are made or services rendered and reasonable assurance regarding measurement and collectibility of the consideration is reasonably assured. Miscellaneous fees and other income are comprised principally of indirect research revenues as well as administrative fees charged to students. Administrative fees are recorded as revenue in the financial year in which the course sessions are held. Indirect research revenues are recorded on a straight-line basis over the terms of the contracts. Donations and sponsorship revenue are recognized in the period they are received. Externally restricted contributions are recognized in the period in which they are received or receivable if the amounts can be reasonably estimated and collection is reasonably assured. Due to the uncertainty involved in collecting pledged donations, they are not recorded until received.

13 ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) Capital expenditure grants are recorded upon issuance by a provincial ministry of direct grants specifically designated for the acquisition of capital assets. They do not include the annual allocation nor the specific portion of the capital grants which are financed upon issuance of long-term debt by the Province of Quebec. Capital expenditure grants also include the MELS grants related to the payment of the interest on long-term debt, interest on the temporary financing of capital expenditures authorized by the MELS, the reimbursement of maturing debts and amounts paid to the bond sinking fund. The Government of Quebec contributes annually to a bond sinking fund on behalf of the University. These sinking fund amounts are intended to be used as repayment of outstanding bonds at maturity and the MELS has requested that they be presented as a reduction of bonds payable. Contributed services These financial statements do not report the value of contributed volunteer hours and small gifts-in-kind, as the fair value thereof is not practicably determinable. Inventories Inventories of the retail stores are valued at the lower of cost and net realizable value. Cost is determined by the first in, first out method. Deferred charges Tenant inducements and commissions on rental properties, which are deferred and amortized on a straight-line basis over the duration of the respective leases. Capital assets Purchased capital assets are recorded at cost. Interest related to capital assets under construction is capitalized at rates reflecting the financing costs of such assets. Contributed capital assets are recorded at fair value at the date of contribution. Improvements to leased premises are capitalized. Buildings under construction and other major capital projects funded by the Operating Fund are recorded directly in the Capital Assets Fund.

14 ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) Amortization The annual amortization rates and terms are prescribed by the MELS, based on the useful lives of various asset categories as follows: Methods Periods Buildings Straight-line Over 40 to 50 years Building alterations mechanical Straight-line 25 years Building alterations interior Straight-line 30 years Building alterations architectural or structural Straight-line 40 years Leasehold improvements Straight-line Term of the lease (maximum 10 years) Furniture and equipment Straight-line Over 3 to 15 years Library collection Straight-line 10 years Share of the large bandwidth telecommunications network managed by Réseau d'informations scientifiques du Québec (RISQ) Inc. Art collection Amortization is recorded in the Capital Assets Fund. Foreign currency translation Straight-line Over the term of the arrangement No amortization Monetary assets and liabilities in foreign currency are translated at the exchange rate in effect at the balance sheet date, whereas other assets and liabilities are translated at the exchange rate in effect at the transaction date. Revenue and expenses in foreign currency are translated at the average rate in effect during the year, with the exception of revenue and expenses relating to non-monetary assets and liabilities, which are translated at the historical rate. Exchange gains or losses on financial assets and liabilities are recognized in the statement of operations, except for exchange gains or losses on available-for-sale financial assets. Exchange gains or losses on available-for-sale financial assets are considered in the changes in unrealized gains on available-for-sale investments and are included in the statement of changes in fund balances. Exchange gains or losses on held-for-trading financial instruments are included in changes in fair value presented in the statement of operations.

15 ACCOUNTING POLICIES AND DIFFERENCES WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) Embedded derivatives Embedded derivatives that are not closely related to the host contract must be separated and classified as held-for-trading financial instruments. They are then measured at fair value; changes in fair value are recognized in the statement of operations and transaction costs from these embedded derivatives are recognized in the statement of operations as administrative expenses. As at, the University has no hybrid instrument including an embedded derivative that should be separated from the host contract. (B) DIFFERENCES WITH GENERALLY CANADIAN ACCEPTED ACCOUNTING PRINCIPLES The differences between recommendations in the Cahier des définitions, des termes et des directives de présentation du rapport financier annuel for Quebec universities and Canadian generally accepted accounting principles are the following: The accrual basis of accounting is not used to account for vacation payable and future benefits; Capital expenditures from the Operating Fund and from the Restricted Funds are recorded as an expense in the Operating Fund; Contributions to financing or long-term debt repayment that are not financed by the MELS are recorded as expenses in the Operating Fund; Subsidies and grants revenue in the Restricted Funds at year-end that is not used to support the cost of certain specifically designated transactions is not recorded as deferred revenue but is instead included in the corresponding fund balance; A nil interest rate is considered as the market conditions to assess the initial fair value and year-end subsidies receivable from the MELS, all other ministries and all levels of government. 4 - SUBSIDIES RECEIVABLE $ $ Operating Fund Amount receivable from the MELS (a) 38,860 44,231 Social Sciences and Humanities Research Council of Canada 5,186 5,398 Canadian Institutes of Health Research Natural Sciences and Engineering Research Council of Canada ,708 50,348 Less: Long-term portion of the amount receivable from MELS (3,194) (5,309) 41,514 45,039

16 SUBSIDIES RECEIVABLE (Continued) (a) Includes an amount of $975 corresponding to a subsidy receivable resulting from a moratorium established by the MELS regarding a reclassification process of the courses, according to the Clarder Codes. Due to uncertainties inherent in the estimation process, it is possible that this estimate will be further revised once the MELS has reviewed the classification suggested by the University. Furthermore, this amount includes $23,368 corresponding to a subsidy conditional on attaining a balanced financial situation for the year ended. (b) In the year ended May 31, 2004, the University recorded a subsidy of the amount of $5,899. This amount represents the University s share of the shortfall resulting from budget cuts in the University imposed by the MELS. MELS has indicated its intention to pay that amount over 10 years beginning in fiscal year ending. Therefore, the sum of $590 is included in the short-term portion of the subsidies receivables and a sum of $3,193 is presented in the long-term portion $ $ Research Fund Social Sciences and Humanities Research Council of Canada 2,416 1,780 Natural Sciences and Engineering Research Council of Canada 5,698 5,445 Canadian Institutes of Health Research 1,870 1,993 Le Fonds québécois de la recherche sur la nature et les technologies (F.Q.R.N.T.) Le Fonds québécois de la recherche sur la société et la culture (F.Q.R.S.C.) 2,291 2,274 Le Fonds de la recherche en santé du Québec (F.R.S.Q) Other ,404 13,255 Designated Fund Canada Foundation for Innovation Federal Government Other Capital Assets Fund Amount receivable from the MELS 6,300 6,322 Canada Foundation for Innovation Federal Government ,906 7,247

17 ACCOUNTS RECEIVABLE $ $ Operating Fund Tuition fees, net of allowance for doubtful accounts 11,898 13,023 Services, advances and other, net of allowance for doubtful accounts 5,205 4,986 17,103 18, INVENTORIES $ $ Retail stores Bookstore 2,086 1,815 Computer store Art store ,675 2,491 Printing supplies ,693 2, DEFERRED CHARGES AND PREPAID EXPENSES $ $ Operating Fund Deferred charges Tenant inducements and commissions on rental properties 1,375 1,515 Prepaid expenses 3,747 3,854 5,122 5,369 Capital Assets Fund Deferred charges Deposit for lot purchase offer DUE FROM CONCORDIA UNIVERSITY FOUNDATION The value of the long-term portion of the due from Concordia University Foundation was determined using discounted cash flows using a rate of 2.2%. The receipts over the next two years according to the cash flows will be nil in 2010 and $13,911 in 2011.

18 CAPITAL ASSETS 2009 Accumulated Cost amortization Net $ $ $ Land 36,488 36,488 Buildings, building alterations, and leasehold improvements 524, , ,170 Construction in progress 108, ,856 Furniture and equipment 100,079 56,321 43,758 Library collection 34,712 19,765 14,947 Share of the large bandwidth telecommunications network managed by Réseau d'informations scientifiques du Québec (RISQ) Inc. 2, ,361 Art collection 2,085 2, , , , Accumulated Cost amortization Net $ $ $ Land 36,488 36,488 Buildings, building alterations, and leasehold improvements 517,047 96, ,072 Construction in progress 66,071 66,071 Furniture and equipment 103,794 55,850 47,944 Library collection 32,947 17,084 15,863 Share of the large bandwidth telecommunications network managed by Réseau d'informations scientifiques du Québec (RISQ) Inc. 1, ,278 Art collection 2,079 2, , , , BANK LOANS The University has an unsecured line of credit of $190,000 with its bankers, bearing interest at the prime rate of a Canadian chartered bank (2.25% at ; 4.75% at May 31, 2008). This line of credit is renewable annually and is convertible into a fixed rate. At, an amount of $65,600 was outstanding in the form of banker's acceptance bearing an interest rate of 0.94%. The average prime rate for the year was 3.63% (5.79% in 2008) and the average rate on all fixed rate financing for the year was 2.69% (4.28% in 2008).

19 LONG-TERM DEBT $ $ Serviced by the University Balance of purchase price for buildings and land in Montréal for a consideration of $11,451, secured by a hypothec on the land and the building which has an amortized cost of $17,604, bearing interest equivalent to 2/3 of estimated IPC corresponding to 1.53% in 2009 (1.53% in 2008), discounted at 5.17%, repayable in three varying instalments maturing on February 2011, 2018 and ,616 6, % (effective interest rate of 6.97%), $200,000 Series A Senior Unsecured Debentures due September 2, 2042, issued by the University, and subject to a trust indenture. The trust indenture contains certain covenants which place restrictions on the University with respect to the giving of security, disposition of assets and other matters 189, , , ,939 Serviced by the Government of Quebec 5 1/8% loan from Canada Mortgage and Housing Corporation, repayable in semi-annual payments of approximately $52,622 including interest, maturing on March 1, % Series "1B" bonds, maturing on February 18, ,730 4, % Series "6D" bonds maturing on June 18, ,325 2, % Series "7D" bonds, maturing on October 25, ,263 6, % Series "8D" bonds, maturing on October 25, ,221 6, % Series "9D" bonds, maturing on April 3, ,424 4, %, 4.87% Series "10D" bonds, repayable in two varying instalments maturing on March 25, 2011 and ,841 21, %, 4.69% Series "11D" bonds, repayable in four varying instalments, maturing on June 10, 2012 and ,496 24, %, 4.32% Series "12D" bonds, repayable in two varying instalments, maturing on June 30, ,240 9, %, 4.61% Series "13D" bonds, repayable in two varying instalments, maturing on March 28, 2011 and ,871 14, % loan from Financement Québec, repayable in nine varying annual instalments, maturing on October 25, ,800 16, % loan from Financement Québec, repayable in five varying annual instalments maturing on December 1, ,098 10,823

20 LONG-TERM DEBT (Continued) $ $ Serviced by the Government of Quebec (Continued) % loan from Financement Québec, repayable in eight varying instalments maturing on December 1, ,069 27, %, 4.71%, 5% Series "14D" bonds, repayable in three varying annual instalments maturing until June 1, ,905 14, % loan from Financement Québec, repayable in twelve varying instalments, maturing on April ,800 9, %, 4.37%, 4.57% Series "15D" bonds, repayable in three varying instalments, maturing until May 15, ,410 12, % loan from Financement Québec, repayable in six varying instalments, maturing on September 16, ,403 18, % loan from Financement Québec, repayable in seven varying instalments, maturing on December 1, , % loan from Financement Québec, repayable in five varying instalments, maturing on September 23, , % loan from Financement Québec, repayable in seven varying instalments, maturing on December 1, , % Series "E" bonds 10, % Series "2" bonds 5, % loan from Financement Québec 22, , ,018 Cumulative sinking fund paid by the Province of Quebec (22,005) (22,327) 278, ,691 Total long-term debt 475, ,630 Instalments due within one year 32,957 58, , ,725 The MELS makes two types of grants to universities: operating grants and capital grants. Capital grants are authorized under the five-year university capital investment plan and are funded by the Government of Quebec out of public borrowing in the University's name (process known as grant bonds). As a result, the long-term debt listed here above is managed, administered and serviced by the Government of Quebec. In accordance with its Charter and the government decrees adopted pursuant to its Charter (the last such decree having been adopted on July 10, 2003), the aggregate principal amount of debentures and debt securities that the University may have outstanding may not exceed at any time $500,000, not including amounts borrowed by way of loan or promissory note.

21 LONG-TERM DEBT (Continued) Series 1 to 6 and Series "1A" to "15D" bonds require that regular payments be made by the Province of Quebec to a sinking fund. The proceeds from the Series A Senior Unsecured Debentures were used primarily to finance the University's capital projects in the last several years. This offering was separate and distinct from the existing "grant bonds" process which has been used by the Government of Quebec to finance capital spending in the education system in which grant bonds are managed, administered and serviced by the Government of Quebec. The debentures are direct obligations of the University. Repayments of principal over the next five years are scheduled as follows: $ , , , , ,184 Long-term debt Grant bonds managed, administered and serviced by the Government of Quebec The fair values of the grant bonds are estimated using publicly quoted discounted cash flows analyses using discount rates from 2.75% to 4.44%, based on current corresponding rates for similar types of borrowing arrangements. The fair value of these debts as at is $320,074 ($255,221 in 2008) compared to a carrying amount of $300,355 ($244,018 in 2008). Concordia bonds managed, administered and serviced by the University The fair values of the Series A Senior Unsecured Debentures were estimated using the Scotia McLeod index which is a rate of 5.77%. The fair value of this debt as at is $225,930 ($241,244 in 2008) compared to a carrying amount of $189,270 ($189,188 in 2008).

22 INTERNALLY RESTRICTED FUND BALANCES The internally restricted fund balances comprise the following items: $ $ Specific purpose fund Renovation projects Centre for study of classroom programs Research initiatives and infrastructure 3,048 3,033 Student services 1,717 1,811 Scholarship funds 143 Employee training programs 832 1,029 Information technology Other 5,193 1,969 12,287 9,391 Research funded by overhead 4,967 4,458 Faculty Research Development Program 2,190 1,734 Faculty Professional development fund Faculty program in support of RESEA Facilities optimization program Concordia Aid to Scholarly Activities General Purpose Principal Investigator 2,691 2,398 Concordia Research Chair 1,380 1,207 Research Seed Funding 1,075 1,571 Research laboratories Infrastructure for Research Units 1,342 Other ,853 13,754 29,140 23, ANCILLARY SERVICES 2009 Excess Revenue Expenses (deficiency) $ $ $ Retail stores 14,215 13, Residences 1,938 1, Food services (75) Advertising Printing and reproduction services (217) Parking 1, ,232 17,

23 ANCILLARY SERVICES (Continued) 2008 Excess Revenue Expenses (deficiency) $ $ $ Retail stores 14,906 14, Residences 1,722 1,730 (8) Food services (343) Advertising Printing and reproduction services (493) Parking 1, ,526 18, EXPENSES $ $ Academic services Academic 190, ,886 Library 14,583 15,133 Instructional and Information Technology Services 12,713 11, , ,012 Administrative services Administration 47,878 50,665 Operational services 28,907 28,642 Rented facilities 3,487 3, RELATED PARTIES 80,272 83,219 The following transactions were concluded in the normal course of operations and measured at the exchange amount, which is the amount established and accepted by the parties. The Concordia University Foundation (the "Foundation") must use its resources exclusively to advance the mission of the University. The Foundation is incorporated under the Canada Corporations Act and is a charitable organization under both the Income Tax Act (Canada) and the Taxation Act (Quebec). Resources of the Foundation amounting to $5,804 ($9,857 in 2008) have been transferred to the University, in accordance with the wishes of donors. At year-end, an amount of $1,844 ($2,797 in 2008) remained receivable by the University. As at, of amounts collected by the University, $1,053 ($2,815 in 2008) remained payable to the Foundation. The assets, liabilities and fund balances of the Foundation total $101,596, $13,911 and $87,685, respectively, as at.

24 RELATED PARTIES (Continued) On September 18, 2008, the University entered into a lease agreement with the Foundation whereas the University has leased to the Foundation certain land and spaces used for parking facilities and which are adjacent to its two campuses as well as ancillary equipment located on such parking facilities, with a retroactive effect to June 1, The lease agreement is granted for a period of three years expiring on May 31, Rental revenues for the period amounted to $356. Net income earned in the course of the exploitation of the premises and of the leased assets by the Foundation has been reallocated to the University in the amount of $259. On September 18, 2008, the University entered into a management agreement with the Foundation whereas the Foundation retained the services of the University to manage and supervise the rental and the operation, and generally, the management of the parking facilities as well as the ancillary equipment, with a retroactive effect to June 1, The lease agreement is granted for a period of three years expiring on May 31, Parking revenues generated by the operations were remitted to the Foundation in the amount of $1,070. Management fees for the same period amounting to $450 were paid by the Foundation to the University. econcordia.com (previously econcordia.com Inc.) is controlled by the Foundation and is engaged in providing courses for the advancement of learning on electronic or other new media, enhancing access to higher education and training and providing for continuing education at the local, regional, national or international levels. During the year econcordia.com Inc. transferred its assets and liabilities to a not-for-profit organization named econcordia.com, a registered charity. In addition, service fees were paid to econcordia.com Inc. and econcordia.com, for the delivery of courses to students of the University. The expense amounted to approximately $3,217 ($2,173 in 2008). As at, the University has $806 payable to econcordia.com for services fees. The University exercises significant influence over the Fondation universitaire de l'université Concordia (the "Foundation"). By law, the Foundation's resources must be used exclusively to promote and financially support the teaching and research activities of the University. The Foundation was created by Order-In-Council , dated June 25, 1997, of the provincial government, in accordance with the Loi sur les fondations universitaires. As a mandatory of the Crown, it is recognized as a charitable organization under both the Income Tax Act (Canada) and the Taxation Act (Quebec). In 2009, the Foundation remained inactive PENSION PLAN The Pension Plan for the Employees of the University (the "Pension Plan") is a defined benefit pension plan covering eligible employees of the University. The Pension Plan is registered with the Régie des rentes du Québec.

25 PENSION PLAN (Continued) Pension funding The last actuarial valuation of the Pension Plan, for funding purposes, was performed as of January 1, 2008 by Mercer Human Resource Consulting using the projected unit credit actuarial cost method. As at that date, the Pension Plan had a funding excess of $6,300. Based on the results of this valuation and on the University's long-term funding policy, a contribution of $16,942 was made during the fiscal year ($18,111 in 2008). This contribution has been reported as the pension expense for this fiscal year. Pension accounting As requested by the MELS, additional information on the Pension Plan has been presented. If the University reported pension expense in accordance with Canadian generally accepted accounting principles, the University's pension expense for the year ended would have been $5,004 ($6,044 in 2008). At the date of adoption of Canadian generally accepted accounting principles by the University, the pension expense will be recalculated and could differ from the pension expense indicated in this statement for information purposes only. As of, the accrued benefit obligation and the market value of plan assets are $630,700 and $532,800 respectively ($642,200 and $645,200 respectively as of May 31, 2008). The methods and assumptions used in the valuation for accounting purposes were selected by the University in accordance with the requirements of Canadian generally accepted accounting principles. Other plans and arrangements The University has a commitment to a specific group of employees to provide early retirement pension supplements (ERPS) over and above the pension benefits payable under Concordia's registered pension plan. The ERPS liability of $4,200 ($3,279 in 2008) recorded in the balance sheet has been determined by the University's actuaries and represents the estimated contribution required to fund the liability using the going concern basis and the following assumptions; a non-indexed interest rate of 6.0% per year and an indexation rate of 0.55% per year. Contributions made in the year amounting to $1,236 ($979 in 2008) are expensed in the Operating Fund FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES, AND FINANCIAL RISKS Financial risk management objectives and policies The University is exposed to various financial risks resulting from both its operating and investing activities. The University does not enter into financial instrument agreements including derivative financial instruments for speculative purposes.

26 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES, AND FINANCIAL RISKS (Continued) Financial risks The University's main financial risk exposure and its financial risk management policies are as follows. Interest rate risk Interest rate risk refers to the adverse consequences of interest rate changes on the University's cash flows and financial position. The University is exposed to interest rate risk as a result of short-term floating rate bank indebtedness. The University manages the interest rate risk by locking in to fixed rates as explained in Note 10. Liquidity risk Liquidity risk management serves to maintain a sufficient amount of cash and cash equivalents. The University establishes budget and cash estimates to attain its objectives and fulfil its obligations. Credit risk Credit risk relates to the potential that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. A significant portion of the University's receivables are due from governments which are believed to be at low risk of default. The University considered the concentration of the remaining risks to be minimal considering the large base of counterparties CAPITAL MANAGEMENT POLICIES AND PROCEDURES The University's capital is comprised of fund balances. With respect to managing its capital, the University's objective is to maintain its financial capacity to train students, to contribute to the advancement of knowledge through research activities and render services to the community. According to third party requirements, the University is subject to certain restrictions with respect to its capital. These requirements are contained in certain agreements with providers of funds and contributions earmarked for specific purposes. The University continually monitors these requirements. During the year, the University has complied with its requirements COMMITMENTS Lease agreements As at, the University has commitments for lease agreements totalling $3,923 and expiring until Minimum lease payments for the next years are $1,723 in 2010, $1,511 in 2011, $583 in 2012 and $106 in 2013.

27 COMMITMENTS (Continued) Capital assets financing The Operating Fund has a $249,200 ($218,660 as at May 31, 2008) commitment towards the Capital Assets Fund to finance the capital assets. As at, the University has not developed a plan in order to finance this commitment. Construction in progress The University has undertaken the construction of the new John Molson School of Business complex, as well as some minor renovation projects, for an approximate total cost of $127,000. On November 22, 2006, the Government of Quebec confirmed a $60,000 contribution to finance this new construction. As of, the costs incurred for these projects amounted to $108,856 (see Note 9). Accumulated vacation As at, the University had an obligation to pay accumulated vacation to its employees estimated at $12,806 ($12,436 as at May 31, 2008) CONTINGENCIES As with other large institutions of a similar nature, the University is party to various legal proceedings, including claims such as grievances arising under its collective agreements, and other claims which may present themselves from time to time under the laws regulating employment matters. These matters are resolved in the ordinary course of University administration, and management is confident that all such issues that may arise will be resolved without material effect on the University's financial position. On May 18, 2006, the Supreme Court of Canada released its decision rejecting an appeal demanding the authorization of a class action against the University related to the administration of its pension plan. The Supreme Court decided that this matter had to be decided by a labour arbitrator and not by civil courts. As a result, several unions initiated collective agreement grievance procedures. The University is confident of the administration of the Pension Plan at the times cited in the grievances. These grievances do not refer to a specific amount claimed and are being contested as to being prescribed. It is not possible at the present time to determine the amount of any potential claim. Accordingly, no amount has been accrued in these financial statements related to these claims. No arbitrators have been named to hear these grievances to date. In the normal course of the University's building construction projects, various claims secured by construction hypothecs have been made by building contractors to secure payment. Such hypothecs are related to the buildings constructed or under construction.

28 CONTINGENCIES (Continued) Certain claims have also been made by building contractors for additional payments for alleged services performed and/or damages experienced. In these situations, legal proceedings have commenced and they amount to approximately $13,000. While the University believes that the claims will not be successful and has initiated counter-claims, the outcome of these proceedings is not determinable at this time. The University is confident that these claims will be resolved without material effect on the University's financial position. No amount has been accrued in these financial statements related to these claims. Further to the adoption of the Pay Equity Act, the University must reach an agreement with its various employee unions to ensure compliance with the requirements of this legislation. As at, this work was not finished and no agreement had been reached. Management of the University is not able to make a reasonable estimate of the amount which would potentially be payable upon the conclusion of this exercise. Accordingly, no provision has been recorded in this respect PLEDGES RECEIVABLE Pledges receivable from donors are not recorded on the statement of operations of the Restricted Funds. Pledges receivable amounted to $32,974 as of ($20,800 in 2008). These pledges will be recognized as revenue when collected COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the presentation adopted in the current year.