Financial Statements of SPORT NOVA SCOTIA. March 31, 2013

Transcription

1 Financial Statements of SPORT NOVA SCOTIA March 31, 2013

2 INDEPENDENT AUDITOR S REPORT To the Members and the Board of Directors of Sport Nova Scotia Deloitte LLP 1969 Upper Water Street Suite 1500 Purdy's Wharf Tower II Halifax NS B3J 3R7 Canada Tel: Fax: We have audited the accompanying financial statements of Sport Nova Scotia, which comprise the statements of financial position as at March 31, 2013, March 31, 2012 and April 1, 2011 and the statements of revenues and expenses and changes in net assets and cash flows for the years ended March 31, 2013 and March 31, 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor'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 organization'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 organization'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 audit 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 Sport Nova Scotia as at March 31, 2013, March 31, 2012 and April 1, 2011, and the results of its operations, and its cash flows for the years ended March 31, 2013 and March 31, 2012 in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Accountants Halifax, Nova Scotia June 7, 2013

3 Table of Contents March 31, 2013 Statements of Financial Position 1 Page Statements of Revenues and Expenses 2 Statements of Changes in Net Assets 3 Statements of Cash Flows 4 Notes to the Financial Statements 5-9 Schedule 1 Schedule of Revenues 10 Schedule 2 Schedule of Operating Expenses 11 Schedule 3 Schedule of Programs Expenses 12

4 Statements of Financial Position March 31, 2013 March 31, March 31, April 1, (Note 2) (Note 2) ASSETS Current Cash (Note 4) $ 214,697 $ 251,130 $ 245,869 Short-term investments (Note 5) 10,963,943 8,911,178 6,783,419 Accounts receivable 1,012,207 1,182, ,302 Deferred rent receivable 43,867 41,639 32,478 Prepaid expenses and inventory 119,281 46,721 33,901 HST receivable ,208 12,354,245 10,433,444 7,653,177 Capital assets (Note 6) 934, , ,914 $ 13,288,670 $ 11,399,045 $ 8,637,091 LIABILITIES Accounts payable and accrued liabilities $ 447,022 $ 319,221 $ 255,295 Government remittances payable 22,904 21,233 18,391 Deferred revenue 9,526,034 7,974,014 5,427,296 9,995,960 8,314,468 5,700,982 NET ASSETS Unrestricted 910, , ,050 Building Fund - internally restricted 554, , ,284 KidSport Fund - internally restricted 301, , ,382 Sport Fund - internally restricted 564, , ,389 Net investment in capital assets 934, , ,911 Restricted for capital asset replacement (Note 7) 27,093 27,093 27,093 3,292,710 3,084,577 2,936,109 $ 13,288,670 $ 11,399,045 $ 8,637,091 Commitments (Note 9) ON BEHALF OF THE BOARD... Director... Director Page 1 of 12

5 Statements of Revenues and Expenses Year ended March 31, (Note 2) Revenues Operating (Schedule 1) $ 1,200,487 $ 1,167,695 Programs (Schedule 1) 5,605,906 5,094,814 6,806,393 6,262,509 Expenses Operating (Schedule 2) 1,127,921 1,087,937 Programs (Schedule 3) 5,379,776 4,929,042 6,507,697 6,016,979 Excess of revenues over expenses before amortization 298, ,530 Amortization 90,563 97,062 Excess of revenues over expenses $ 208,133 $ 148,468 Page 2 of 12

6 Statements of Changes in Net Assets Year ended March 31, 2013 Net Investment in Capital Assets March 31, 2013 Internally Restricted Restricted for Program Funds March 31, April 1, Capital Asset Building KidSport Sport Replacement Fund Fund Fund Unrestricted Total Total Total (Note 2) (Note 2) Beginning balance $ 965,598 $ 27,093 $ 484,668 $ 274,623 $ 477,273 $ 855,322 $ 3,084,577 $ 2,936,109 $ 2,711,451 Excess (deficiency) of revenues over expenses (90,563) - 265,452 27,371 89,428 (83,555) 208, , ,658 Investment in capital assets 59,387 - (48,845) (797) (1,812) (7,933) Interfund transfers Transfer Building Fund to General Fund - - (310,000) , Rental revenue paid from General Fund to Building Fund , (181,248) Building management fee - - (17,545) , Closing balance $ 934,422 $ 27,093 $ 554,978 $ 301,197 $ 564,889 $ 910,131 $ 3,292,710 $ 3,084,577 $ 2,936,109 Page 3 of 12

7 Statements of Cash Flows Year ended March 31, (Note 2) Operating activities Excess of revenues over expenses $ 208,133 $ 148,468 Item not affecting cash Amortization of capital assets 90,563 97,062 Changes in non-cash working capital items (Note 11) 1,777,023 1,966,239 2,075,719 2,211,769 Investing activities Acquisition of capital assets (59,387) (78,749) Acquisition of short-term investments (2,052,765) (2,127,759) (2,112,152) (2,206,508) NET CASH INFLOW (OUTFLOW) (36,433) 5,261 CASH, BEGINNING OF YEAR 251, ,869 CASH, END OF YEAR $ 214,697 $ 251,130 Page 4 of 12

8 Notes to the Financial Statements March, 31, BASIS OF PRESENTATION Sport Nova Scotia ( Sport Nova Scotia or the Organization ) is a non-profit organization incorporated to assist and promote amateur sport in Nova Scotia. 2. ADOPTION OF NEW ACCOUNTING FRAMEWORK During the year ended March 31, 2013, the Organization adopted the new accounting standards for not-for-profit-organizations (the new standards ) issued by the Accounting Standards Board of the Canadian Institute of Chartered Accountants ( CICA ) and set out in Part III of the CICA Handbook. In accordance with Section 1501 of Part III of the CICA Handbook, First-time adoption, ( Section 1501 ), the date of transition to the new standards is April 1, 2011 and the Organization has prepared and presented an opening balance sheet at the date of transition to the new standards. This opening balance sheet is the starting point for the Organization's accounting under the new standards. In its opening balance sheet, under the recommendations of Section 1501, the Organization: (a) recognized all assets and liabilities whose recognition is required by the new standards; (b) did not recognize items as assets or liabilities if the new standards do not permit such recognition; (c) reclassified items that it recognized previously as one type of asset, liability or component of equity, but are recognized as a different type of asset, liability or component of net assets under the new standards; and (d) applied the new standards in measuring all recognized assets and liabilities. In accordance with the requirements of Section 1501, the accounting policies set out in Note 3 have been consistently applied to all years presented and adjustments resulting from the adoption of the new standards have been applied retrospectively excluding cases where optional exemptions available under Section 1501 have been applied. The Organization has not elected to apply any of the available exemptions available under Section There were no adjustments resulting from the adoption of the new standards. 3. ACCOUNTING POLICIES The financial statements were prepared in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the CICA Handbook and include the following significant accounting policies: Fund accounting The Organization maintains its accounts in accordance with the fund accounting method. This method observes limitations, if any, on the use of organization resources by maintaining separate accounts for each fund. Fund accounts are further classified as either unrestricted or restricted funds. Unrestricted funds are available to be used in their entirety at the discretion of the Organization. Restricted funds consist of those for which a specified application has been defined or upon which expenditure conditions have been set. Page 5 of 12

9 Notes to the Financial Statements March, 31, ACCOUNTING POLICIES (continued) Fund accounting (continued) During the year, the Sport Fund, KidSport Fund, the Building Fund and Canada Games Fund were segregated as separate funds with their own bank accounts and reported as internally restricted funds. Revenue recognition Revenue is recognized in accordance with the restricted fund method. This method requires all restricted contributions to be recognized as revenue in the year they are received, unless there is no externally restricted fund reported, in which case they are deferred in the general fund and recognized in the same year as the related expense. Rental income includes rent earned from tenants under lease agreements. Base rental income from leases with contractual rent increases are recognized on a straight-line basis over the term of the lease including any free rent periods. The difference between the rental income recognized and the amounts contractually due under the lease agreements are charged to deferred rent receivable. Recoverable operating expenses are recognized as revenue in the period in which applicable expenses are incurred. Cash Cash is comprised of balances on deposit with a financial institution. Capital assets Capital assets are recorded at cost and donated equipment is recorded at fair value. Capital assets are being amortized on the straight-line basis over their estimated useful lives as follows: Building Furniture and fixtures Computer hardware and software 25 years 10 years 3 years Use of estimates The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations 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 reporting date and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. Significant financial statement items that require the use of estimates are as follows: amortization of capital assets, deferred revenue, accrued liabilities, and allowance for doubtful accounts. These estimates are reviewed periodically and adjustments are made, as appropriate, in the statement of operations in the year they become known. Page 6 of 12

10 Notes to the Financial Statements March, 31, ACCOUNTING POLICIES (continued) 4. CASH Impairment of long-lived assets Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized when their carrying value exceeds the total undiscounted cash flows expected from their use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. Financial instruments Sport Nova Scotia initially measures its financial assets and financial liabilities at fair value. It subsequently measures all its financial assets and financial liabilities at amortized cost. The financial assets subsequently measured at amortized cost include accounts receivable. The financial liabilities measured at amortized cost include accounts payable and accrued liabilities. Sport Nova Scotia administers bank accounts for KidSport Canada (Nova Scotia Chapter) and Sports & Recreation payroll. These bank accounts are held in the name of Sport Nova Scotia, but do not belong to the Organization and, therefore, these accounts are not included in these financial statements. 5. SHORT-TERM INVESTMENTS Short-term investments consist of one year GIC s and investment savings with a combined principal amount of $10,963,943 ( $8,911,178; $6,783,419) which earn interest from 1% to 1.35%. The maturity dates of the GIC s range from April 2013 to January CAPITAL ASSETS March 31, April 1, March 31, Accumulated Net Book Net Book Net Book Cost Amortization Value Value Value Land $ 300,000 $ - $ 300,000 $ 300,000 $ 300,000 Building 1,810,224 1,381, , , ,423 Furniture and fixtures 739, , , , ,649 Computer hardware and software 217, ,796 9,311 14,133 12,842 $ 3,067,231 $ 2,132,806 $ 934,425 $ 965,601 $ 983,914 Page 7 of 12

11 Notes to the Financial Statements March, 31, RESTRICTED FOR CAPITAL ASSET REPLACEMENT The general fund has established a reserve for future replacement of capital assets and for major repairs and maintenance to the equipment. On a periodic basis, an amount is appropriated to unrestricted equity and reflected in this account. Included in cash is $27,093 ( $27,093; $27,093) related to this reserve. 8. INCOME TAXES Sport Nova Scotia is registered under the Societies Act of the Province of Nova Scotia and is exempt from income tax on its operations. 9. COMMITMENTS The Organization leases office equipment under operating leases expiring in June Future lease payments aggregate $9,725 and are payable over the next year. 10. CONTRIBUTED GOODS AND SERVICES During the year, Sport Nova Scotia recorded $451,913 ( $431,227; $595,360) in donated goods and services. The majority of these contributions relate to public awareness campaigns, program promotion, Canada Games and fundraising. These contributions have been recorded at their fair value on the date of contribution. 11. CHANGES IN NON-CASH WORKING CAPITAL ITEMS March 31, March 31, April 1, Decrease (increase) in accounts receivable $ 170,569 $ (640,474) $ 644,293 Increase in deferred rent receivable (2,228) (9,161) - Increase in prepaid expenses and inventory (72,560) (12,820) (13,040) (Increase) decrease in HST receivable (250) 15,208 (12,332) Increase (decrease) in accounts payable and accrued liabilities 127,801 63,926 (73,984) Increase in government remittances payable 1,671 2,842 2,306 Increase in deferred revenue 1,552,020 2,546, ,939 $ 1,777,023 $ 1,966,239 $ 1,414, RELATED PARTY TRANSACTIONS Sport Nova Scotia is a member of the Canadian Council of Provincial and Territorial Sport Federations Inc. (CCPTSF). As such, the Organization administers the Nova Scotia Amateur Sport Fund, a provincial fund established under the National Sport Trust Fund (NSTF). Sport Nova Scotia is a licensee of KidSport Canada and as such administers a provincial fund. Page 8 of 12

12 Notes to the Financial Statements March, 31, CONTINGENT LOSS NPO status review Sport Nova Scotia is currently being reviewed by the Canada Revenue Agency to assess its eligibility to continue to have its earnings from its real estate property held under the Building Fund considered to be non-taxable. The outcome of this review remains uncertain as at the date of financial statements, and as such was not provided for as at March 31, HST audit The Organization is currently being audited by the Canadian Revenue Agency with regards to the claim of input tax credits for the period of April to June The outcome of this audit remains uncertain as at the date of financial statements, and as such was not provided for as at March 31, FINANCIAL INSTRUMENTS Fair value The fair value of cash, short-term investments, accounts receivables, and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturities. Liquidity risk Liquidity risk is the risk that the Organization will not be able to meet its financial obligations as they become due. The Organization is exposed to liquidity risk in its ability to finance its working capital requirements and meet its cash flow needs. Given the Organization s currently available liquid resources, from both financial assets and on-going operations, as compared to its contractual obligations, management assesses the Organization s liquidity risk to be low. Interest rate risk The Organization is subject to interest rate risk with respect to its investments and it manages this risk by investing in low-risk securities. Credit risk Credit risk arises with uncertainties of predicting financial difficulties tenants may experience which could cause them to be unable to fulfil their lease requirements. The Organization mitigates this risk by having a diversified mix of tenants thereby limiting the exposure to a single tenant. Page 9 of 12

13 Schedule of Revenues Year ended March 31, 2013 SCHEDULE 1 Programs and Administrative Management Centre Total Budget (unaudited) Operating Grant - Province of Nova Scotia $ 227,000 $ 330,000 $ 557,000 $ 518,000 Building - 609, , ,380 Membership 9,000 9,400 18,400 18,000 Interest 16,019-16,019 13,000 $ 252,019 $ 948,468 $ 1,200,487 $ 1,164,380 Programs Sport Fund 3,232,722-3,232,722 3,299,070 KidSport 779, , ,000 Canada Games 30,815-30, ,000 Advocacy sponsorship 204, , ,175 Sport fair 121, , ,275 Sportscape 86,026-86, ,820 Sunsweep 151, , ,820 Youth leadership program 184, , ,000 RICOH awards 102, ,351 93,690 Provincial government funding - sport futures 309, , ,000 Administrative/accounting services 38,552 52,665 91,217 99,400 Postage/courier - 34,139 34,139 37,000 Rental income 17,877 29,232 47,109 49,425 Printing/supplies - 31,055 31,055 30,000 PSO contribution administrative support 40,070-40,070 40,000 Network services - 38,710 38,710 36,100 East coast classic 14,633-14,633 25,000 Telecommunications - 16,012 16,012 16,000 DHW funding - sport fair 20,000-20,000 20,000 Sponsorship 22,819-22,819 21,850 Dragon boat 10,000-10,000 10,000 PSO sponsor program 10,000-10,000 10,000 Athlete recognition 4,400-4,400 4,400 DHW funding PSO professional development ,600 Merchandise sales DHW funding- PSO development initiatives 23,163-23,163 55,000 Volunteer recognition awards Corporate Games ,975 $ 5,404,093 $ 201,813 $ 5,605,906 $ 6,103,500 Page 10 of 12

14 Schedule of Operating Expenses Year ended March 31, 2013 SCHEDULE 2 Programs and Administrative Management Centre Total Budget (unaudited) Salaries $ 425,634 $ 193,216 $ 618,850 $ 612,100 Benefits 54,086 33,810 87, ,560 Building - 343, , ,450 Office supplies 7,421 2,576 9,997 10,500 Professional fees 13,587 3,000 16,587 13,000 Advertising and public relations 10,595-10,595 7,050 Annual meeting/reports 4,774-4,774 6,000 Professional development 4,944-4,944 11,500 Board travel/meetings 6,233-6,233 6,000 Travel/meetings 6, ,137 7,300 Telecommunications 4,293-4,293 5,900 Parking 1,932-1,932 2,005 Postage/courier 1,840-1,840 2,400 Temporary help 3,208-3,208 2,350 Printing 1, ,227 2,050 Interest and bank charges 1,820-1,820 2,350 Professional and membership 1,839-1,839 2,800 PSO meetings CCPTSF administrative expenses Donations Bad debts Abuse and harassment training ,000 $ 550,691 $ 577,230 $ 1,127,921 $ 1,147,315 Page 11 of 12

15 SCHEDULE 3 Schedule of Programs Expenses Year ended March 31, 2013 Programs and Administrative Management Centre Total Budget (unaudited) Sport fund $ 3,141,715 $ - $ 3,141,715 $ 3,251,070 KidSport 751, , ,000 Canada Games 30,815-30, ,000 Advocacy 198, , ,020 Sport futures 303, , ,000 Sport fair 134, , ,605 PSO administrative staff support 40,070-40,070 40,000 Youth leadership program 184, , ,000 Sportscape 74,277-74,277 91,465 Sunsweep 131, , ,070 RICOH awards 93,409-93,409 90,310 Sport quarterly 68,888-68,888 71,140 Printing/supplies - 58,132 58,132 59,500 Postage/courier - 34,162 34,162 37,000 Management information system ,675 43,481 43,000 PHAC - afterschool program Telecommunications - 16,485 16,485 16,500 Sponsor/member servicing 22,310-22,310 23,875 Dragon boat 10,000-10,000 10,000 PSO sponsor program 6,000-6,000 10,000 East coast classic 2,456-2,456 2,740 Athlete recognition 3,375-3,375 3,700 PSO professional development ,600 Merchandise cost of sales Volunteer recognition awards PSO development initiatives 23,163-23,163 55,000 Health and safety program Corporate games 4,767-4, ,330 $ 5,228,322 $ 151,454 $ 5,379,776 $ 5,945,925 Page 12 of 12