ALBERTA LUNG ASSOCIATION O/A THE LUNG ASSOCIATION ALBERTA & NWT Financial Statements September 30, 2013, September 30, 2012 and October 1, 2011

Transcription

1 ALBERTA LUNG ASSOCIATION O/A THE LUNG ASSOCIATION ALBERTA & NWT Financial Statements September 30, 2013, September 30, 2012 and October 1, 2011

2 MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING The management of the Alberta Lung Association o/a the Lung Association Alberta & NWT prepared these financial statements and is responsible for their reliability, completeness and integrity. They conform in all material respects to Canadian accounting standards for not-for-profit organizations. Management maintains the necessary accounting and internal control systems designed to ensure: the timely production of reliable and accurate financial information, the protection of assets (to a reasonable extent) against loss or unauthorized use, and the promotion of operational efficiency. The Board of Directors oversees management s responsibilities for the financial reporting and internal control systems. The external auditors, appointed by the Board of Directors, conducted an audit of these financial statements in accordance with Canadian generally accepted auditing standards. The Finance and Audit Committee reviewed these financial statements with the external auditors before recommending their approval to the Board of Directors. Edmonton, Alberta Leigh Allard President and Chief Executive Officer Monte Weber, CA Director of Finance

3 To the Directors of Alberta Lung Association o/a The Lung Association Alberta & NWT INDEPENDENT AUDITORS REPORT Collins Barrow Edmonton LLP 2380 Commerce Place Street N.W. Edmonton, Alberta T5J 4G8 Canada T F We have audited the accompanying financial statements of Alberta Lung Association o/a The Lung Association Alberta & NWT, which comprise the statements of financial position as at September 30, 2013, September 30, 2012 and October 1, 2011 and the statements of operations, changes in net assets and cash flows for the years ended September 30, 2013 and September 30, 2012 and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Alberta Lung Association o/a The Lung Association Alberta & NWT as at September 30, 2013, September 30, 2012 and October 1, 2011, and the results of its operations and its cash flows for the years ended September 30, 2013 and September 30, 2012 in accordance with Canadian accounting standards for not-for-profit organizations. Edmonton, Alberta November 30, 2013 Chartered Accountants This office is independently owned and operated by Collins Barrow Edmonton LLP The Collins Barrow trademarks are used under License.

4 Statements of Financial Position September September October 30, , , 2011 ASSETS Current assets Cash and cash equivalents (Note 5) $ 1,338,848 $ 692,591 $ 904,303 Accounts receivable (Note 4) 21,966 8,960 64,317 Prepaid expenses and deposits 120, ,460 56,622 1,481, ,011 1,025,242 Investments (Note 6) 732, , ,420 Property and equipment (Note 7) 18,259 7,024 5,279 $ 2,232,287 $ 1,541,576 $ 1,890,941 LIABILITIES Current liabilities Accounts payable and accrued liabilities (Note 8) $ 25,281 $ 38,877 $ 73,180 Deferred contributions (Note 9) 761, , , , , ,902 NET ASSETS Internally restricted net assets (property and equipment) 18,259 7,024 5,279 Net assets restricted for endowment purposes 732, , ,669 Unrestricted 694, , ,091 1,445,488 1,079,845 1,313,039 $ 2,232,287 $ 1,541,576 $ 1,890,941 Approved on behalf of the Board Director Director See accompanying notes to the financial statements

5 Statements of Operations For the Years Ended September 30, 2013 and September 30, Revenues Direct mail campaigns (Schedule 1) $ 1,058,233 $ 1,127,563 Other campaigns (Schedule 1) 1,027, ,026 Gaming revenue 421, ,195 Other income (Schedule 1) 371, ,215 Grant revenue 49, ,813 Endowment revenue ,000 2,928,085 3,123,812 Expenses Fundraising 928,106 1,059,437 Health initiatives 834,524 1,269,023 Research and education grants 314, ,024 Administration 309, ,020 National initiatives 187, ,609 Amortization 4,543 4,765 2,578,563 3,221,878 Excess (deficiency) of revenues over expenses $ 349,522 $ (98,066) See accompanying notes to the financial statements

6 Statements of Changes in Net Assets For the Years Ended September 30, 2013 and September 30, 2012 Internally Restricted Restricted (Property for and Endowment Equipment) Purposes Unrestricted Total Balance, September 30, 2012 $ 7,024 $ 716,541 $ 356,280 $ 1,079,845 Excess (deficiency) of revenue over expenses , ,522 Externally restricted investment income , ,121 Endowment redeemed for research Property and equipment purchased 15, (15,778) --- Amortization of property and equipment (4,543) --- 4, Balance, September 30, 2013 $ 18,259 $ 732,662 $ 694,567 $ 1,445,488 Balance, September 30, 2011 $ 5,279 $ 851,669 $ 456,091 $ 1,313,039 Excess (deficiency) of revenue over expenses (98,066) (98,066) Externally restricted investment income , ,872 Endowment redeemed for research --- (150,000) --- (150,000) Property and equipment donation 6, (6,510) --- Amortization of property and equipment (4,765) --- 4, Balance, September 30, 2012 $ 7,024 $ 716,541 $ 356,280 $ 1,079,845 See accompanying notes to the financial statements

7 Statements of Cash Flows For the Years Ended September 30, 2013 and September 30, Cash Provided by (Used in): Operating Activities Excess (deficiency) of revenues over expenses $ 349,522 $ (98,066) Amortization 4,543 4,765 Revenue from donated capital assets --- (6,510) Investments (donated) redeemed --- 8,751 Change in non-cash operating working capital balances related to operations (Note 10) 307,970 (120,652) 662,035 (211,712) Investing Activities Purchase of property and equipment (15,778) --- Increase (decrease) in cash 646,257 (211,712) Cash and cash equivalents, beginning of year 692, ,303 Cash and cash equivalents, end of year $ 1,338,848 $ 692,591 See accompanying notes to the financial statements

8 1. Purpose of the Association The Alberta Lung Association ( Association ) was incorporated under the Societies Act of Alberta. Its mission and objective is to improve respiratory health through fundraising, community health education programs and professional education activities. 2. Summary of Significant Accounting Policies The financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations ( ASNPO ). The precise determination of many assets and liabilities is dependent on future events. As a result, the preparation of financial statements for a period involves the use of estimates and approximations that have been made using careful judgement. Actual results could differ from those estimates and approximations. The financial statements have, in management s opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below: (a) Revenue Recognition These financial statements have been prepared using the deferral method of accounting for contributions, the key elements of the revenue recognition policies are: (i) Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. (ii) Unrestricted contributions are recognized as revenue in the year received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Expenses are recognized when they are incurred. (iii) Contributions for endowment are recognized as direct increases in Net Assets Restricted for Endowment Purposes when the donor specifies restrictions on the use of the contributions. (iv) Externally restricted net investment income that must be added to the principal amount of resources held for endowment is recognized as direct increases in Net Assets Restricted for Endowment Purposes. (b) Donated Services The work of the Association is dependent on the voluntary service of many individuals. Since these services are normally not purchased by the Association and because of the difficulty of determining their fair market value, donated services are not recognized in the financial statements.

9 2. Summary of Significant Accounting Policies (Continued) (c) Allocation of Expenses The Association provides for certain allocation of general operating costs, specifically the cost of rent for the Edmonton office, insurance, computer support/maintenance and professional fees are allocated 27% to Fund Development and 53% to the Health Initiatives department from the Administration department. The percentage allocated is based on each department s percentage share of full-time employees. (d) Property and Equipment Property and equipment are recorded at cost. Contributed property and equipment, if any, are recorded at fair value at the date of contribution. Equipment under capital lease is recorded at the present value of the minimum lease payments required under the term of the lease. Amortization is calculated on a straight-line basis over the assets estimated useful lives, at the following rates: Computer hardware and software Furniture and fixtures Kiosks Equipment 3 years 5 years 5 years 4 years (e) Financial Instruments Measurement of Financial Instruments The Association initially measures its financial assets and financial liabilities at fair value, except for certain non-arm s length transactions. The Association subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments in equity instruments that are quoted in an active market and financial instruments designated to be measured at fair value, which are measured at fair value. Changes in fair value are recognized in the statement of revenues, expenditures and fund balances. Financial assets measured at amortized cost include cash, accounts receivables and investments. Financial liabilities measured at amortized cost include the accounts payable and accrued liabilities. Impairment Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. A previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in the statement of revenues, expenditures and fund balances.

10 3. Transition to Canadian Accounting Standards for Not-For-Profit Organizations These financial statements are for the period covered by the Association s first annual financial statements prepared in accordance with Canadian accounting standards for not-for-profit organizations ( ASNPO ). The accounting policies in Note 2 have been applied in preparing the annual financial statements for the years ended September 30, 2013 and 2012, and the opening statement of financial position on October 1, 2011, the transition date. In preparing the opening statement of financial position and the financial statements for the year ended September 30, 2012, no adjustments were required to amounts previously reported in financial statements that were prepared in accordance with Canadian generally accepted accounting principles. The transition to Canadian accounting standards for not-for-profit organizations provides for certain elections on first time adoption. The Association has opted not to take any of the elections available for first time adoption of Canadian accounting standards for notfor-profit organizations and accordingly there has been no impact on the Association s financial position, operations or net assets as a result of transition to ASNPO. 4. Accounts Receivable Accounts receivable included the following: September September October 30, , , 2011 Trade receivables $ 4,996 $ 374 $ 53,782 Goods and Services Tax receivable 16,970 8,586 10,535 $ 21,966 $ 8,960 $ 64, Cash and Cash Equivalents Cash and cash equivalents consist of: September September October 30, , , 2011 Unrestricted cash $ 587,833 $ 269,737 $ 399,581 Restricted cash 751, , ,722 $ 1,338,848 $ 692,591 $ 904,303 Restricted cash consists of cash restricted for special projects, gaming activities and Campaign for a Smoke-Free Alberta and Smoke-Free Calgary (Note 17).

11 6. Investments The value of the investments as at September 30, 2013 is $732,662 ( $716,541). The investments have been designated as follows: September September October 30, , , 2011 Externally restricted for endowment purposes $ 732,662 $ 716,541 $ 851,669 Unrestricted investment ,751 $ 732,662 $ 716,541 $ 860,420 Investment income earned on resources held for endowment is required by the donor to be reinvested back into the Endowment and as such is recorded as direct increase in Net Assets Restricted for Endowment Purposes. Investment income consists of interest, dividends and gains/(losses). Investment income for the year ended September 30, 2013 is $16,121 ( $14,872) and has been reflected as a direct increase in the net assets restricted for endowment purposes. In order to earn optimal financial returns at an acceptable level of risk, the Association has established an investment policy with maximum asset mix ranges of 3% to 40% for cash and money market securities, 60% to 97% for fixed income securities and 0% to 10% for equities. Risk is reduced through asset class diversification, diversification within each asset class and quality constraints on fixed income securities and equity investments. (a) Interest Rate Risk The Association manages the interest rate risk exposure of its fixed income investments by management of average duration and laddered maturity dates. (b) Currency Rate Risk The Association is not exposed to foreign exchange fluctuations on its investments as investments are not comprised of any foreign securities or foreign currency denominated investments. (c) Credit and Market Risks The Association s investment policy restricts the types and proportions of eligible investments, thus mitigating the Association s exposure to market risk. The following are key components of the Association s investment policy: o o o o Minimum 70% of the portfolio is to be invested in high quality bonds, with a minimum credit rating of AA as defined by Standard & Poors and/or Dominion Bond Rating Services (DBRS). Minimum credit rating standard of BBB as defined by Standard & Poors, and/or DBRS at time of purchase. Maximum allowable investment in BBB credit bonds as defined by Standard & Poors, and/or DBRS: 10% Maximum allowable investment in A as defined by Standard & Poors, and/or DBRS credit bonds: 10%

12 6. Investments (Continued) (c) Credit and Market Risks (Continued) o o o Maximum allowable investment in corporate bonds: 50% of portfolio Maximum allowable investment in non-rated bonds: 10% of portfolio Minimum credit rating for preferred share securities: P1 low, as defined by Standard & Poors or Dominion Bond Rating Service. 7. Property and Equipment Details of property and equipment are as follows: 2013 Accumulated Cost Amortization Net Computer hardware and software $ 449,601 $ 435,595 $ 14,006 Furniture and fixtures 101, , Kiosks 37,504 37, Equipment 6,510 2,373 4,137 $ 594,705 $ 576,446 $ 18, Accumulated Cost Amortization Net Computer hardware and software $ 433,822 $ 433,822 $ --- Furniture and fixtures 101,090 99,830 1,260 Kiosks 37,504 37, Equipment 6, ,764 $ 578,926 $ 571,902 $ 7, Accumulated Cost Amortization Net Computer hardware and software $ 433,822 $ 433,822 $ --- Furniture and fixtures 101,090 95,811 5,279 Kiosks 37,504 37, Equipment $ 572,416 $ 567,137 $ 5,279 Property and equipment includes donated capital assets of $nil ( $6,510; $nil) during the year.

13 8. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities include payroll remittances of $2,918 at September 30, 2013 (September 30, $nil; October 1, $1,111). 9. Deferred Contributions Deferred contributions represent unspent externally restricted resources. Changes in the deferred contributions balance are as follows: 2013 Health Gaming Initiatives Total Balance, beginning of year $ 160,230 $ 262,624 $ 422,854 Amounts received/receivable during the year 457, ,019 1,185,508 Amounts recognized as revenue (421,776) (425,068) (846,844) Balance, end of year $ 195,943 $ 565,575 $ 761, Health Gaming Initiatives Total Balance, beginning of year $ 117,058 $ 387,664 $ 504,722 Amounts received/receivable during the year 595, ,130 1,264,497 Amounts recognized as revenue (552,195) (794,170) (1,346,365) Balance, end of year $ 160,230 $ 262,624 $ 422, Health Gaming Initiatives Total Balance, beginning of year $ 162,666 $ 313,285 $ 475,951 Amounts received/receivable during the year 543, ,463 1,204,356 Amounts recognized as revenue (589,501) (586,084) (1,175,585) Balance, end of year $ 117,058 $ 387,664 $ 504,722

14 10. Change in Non-Cash Working Capital Balances Accounts receivable $ (13,006) $ 55,357 Prepaid expenses (4,092) (59,838) Accounts payable and accrued liabilities (13,596) (34,303) Deferred contributions 338,664 (81,868) $ 307,970 $ (120,652) 11. Related Party Transactions The Association is affiliated with the Canadian Lung Association ( CLA ) and other provincial associations across Canada. Each provincial association operates autonomously. The CLA collects and disburses donations on behalf of the provincial associations. In addition, for the year ended September 30, 2013, the Association paid CLA monthly research and general assessments totalling $69,704 ( $69,704) and $117,905 ( $117,905) respectively. The CLA is also a participant of the Association s pension plan and each party (CLA and the Association) is responsible for its own commitment to the plan. During the year, $8,050 was paid to a company controlled by a member of the Board of Directors for consulting services. All related party transactions are in the normal course of operations and measured at the exchange amount which is the amount agreed to between the related parties. 12. Allocation of Expense The Association provides for certain allocation of general operating costs, specifically the cost of rent for the Edmonton office, insurance, computer support/maintenance and professional fees are allocated 27% to Fund Development and 53% to the Health Initiatives department from the Administration department. The percentage allocated is based on each department s percentage share of full-time employees. The allocation for the year ended September 30, 2013 is as follows: 2013 Allocated Allocated to (from) Fund Development Health Administration Rent $ 34,683 $ 68,083 $ (102,766) Equipment rent and repairs 1,798 3,529 (5,327) Insurance 1,384 2,716 (4,100) Computer support/maintenance 12,026 23,607 (35,633) Professional fees 3,040 5,967 (9,007) $ 52,931 $ 103,902 $ (156,833)

15 12. Allocation of Expense (Continued) 2012 Allocated Allocated to (from) Fund Development Health Administration Rent $ 31,628 $ 83,024 $ (114,652) Equipment rent and repairs 1,650 4,330 (5,980) Insurance 1,220 3,203 (4,423) Computer support/maintenance 11,105 29,150 (40,255) Professional fees 3,430 9,004 (12,434) Balance, end of year $ 49,033 $ 128,711 $ (177,744) The Association does not allocate any fundraising costs. 13. Commitments The Association has committed to the following payments: (a) Office premises under a lease agreement that expires March 30, (b) Photocopier under a lease agreement that expires March 31, (c) Two kiosks under lease agreements, both of which expire October 31, (d) Consulting services under contract ending December Minimum annual lease payments for each of the next five years are as follows: 2014 $ 118, $ 84, $ 78, $ 38, $ nil 14. Defined Contribution Pension Plan Employees of the Association participate in a defined contribution registered pension plan administered by Manulife Financial. The Association is required to make current service contributions to the plan of 5% of earnings. Total contributions made by the Association to the plan were $37,510 ( $38,611).

16 15. Fundraising Act of Alberta The following additional information has been included to comply with the disclosure requirement of the Charitable Fund Raising Act of Alberta. Gross contributions received were $2,436,993 ( $1,820,882). Soliciting contributions include: Christmas Seals, Lung Research, Artworks, Sweepstakes, Third Party Fundraising, unsolicited service clubs, staff funds, health partners, foundations, memorials and bequest. The total expenses incurred for the purposes of soliciting contributions were $596,052 ( $700,301). There were no dispositions of contributions that equalled or exceeded 10% of gross contributions received. The total amount paid as remuneration to employees of the Association whose principle duties involved fundraising were $199,494 ( $250,169). The disposal of these contributions was through Research, Education and Awareness which includes: Provincial & National Medical Research Grants Provincial Medical Studentship Grants Provincial Respiratory Health Care Professional Educational Grants Provincial & National Program Grants 16. Income Tax Status The Association is a registered charity within the meaning of the Income Tax Act (Canada) and, as such, is exempt from income taxes. 17. Funds Held on Behalf of Others The Association holds the funds on behalf of the Campaign for Smoke-Free Alberta (CSFA) and Smoke-Free Calgary. These funds are reported in the Association s financial statements and have been included in cash and cash equivalents with a corresponding amount presented as deferred contributions. Campaign for a Smoke Free Alberta (CSFA) The Association is a member of Campaign for a Smoke-Free Alberta (CSFA). This group is comprised of 7 member (provincial) organizations including Canadian Cancer Society (CCS), Heart and Stroke Foundation (HSF), Action on Smoking and Health (ASH), Alberta Health Services (AHS), Alberta Public Health Association and Alberta Policy Coalition for Chronic Disease Prevention (APCCP). Operational decisions are made on a consensus basis. Expenses and payment cheques are reviewed and approved by 2 member organizations, currently the Association and ASH.

17 17. Funds Held on Behalf of Others (Continued) Campaign for a Smoke Free Alberta (CSFA) (Continued) The objective is to develop, manage and execute a provincial advocacy strategy to secure an adequately funded comprehensive tobacco reduction plan for Alberta that includes tobacco taxation, tobacco control legislation, tobacco sales and marketing, regulations and evidence-based tobacco programs. CSFA is not a legal entity; it is a coalition of member organizations. Operating grants offered by the Association to CSFA, for the fiscal year, is $nil. Administrative support is given to CSFA by the Association staff with no compensation. Campaign for a Smoke Free Calgary (CSFC) The Association is a member of Campaign for a Smoke Free Calgary (CSFC). This group is comprised of member organizations in the Calgary area. Decisions are made based on the majority of member responses. Reimbursement and payment cheques are approved by a coalition Co-Chair and processed by the Association. Smoke Free Calgary is a coalition of organizations, invested in the tobacco reduction effort, working towards a tobacco free Calgary. CSFC is not a separate legal entity, but a coalition of member organizations. The Association provides in-kind administrative support for funds processing.

18 Schedules of Revenue Schedule 1 For the Years Ended September 30, 2013 and September 30, Revenue Direct mail campaigns Christmas Seals $ 661,463 $ 624,673 Lung Research 201, ,497 Artworks 114, ,818 Sweepstakes 80, ,575 $ 1,058,233 $ 1,127,563 Other Campaigns Community Fundraising $ 184,883 $ 170,227 Bequests 592, ,082 Memorials 103, ,241 Monthly donors 85,759 88,880 Other Donation income 54,473 17,106 Door to Door 6,669 4,490 $ 1,027,131 $ 518,026 Other Income Event Sponsorship $ 287,697 $ 115,698 Foundation revenue 60,000 59,595 Other revenue 23,659 38,922 $ 371,356 $ 214,215 See accompanying notes to the financial statements