Financial Statements of SPORT NOVA SCOTIA. March 31, 2014

Transcription

1 Financial Statements of SPORT NOVA SCOTIA March 31, 2014

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 statement of financial position as at March 31, 2014, and the statements of revenues and expenses and changes in net assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor'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, 2014, and the results of its operations, and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Accountants Halifax, Nova Scotia June 12, 2014

3 Table of Contents March 31, 2014 Statement of Financial Position 1 Page Statement of Revenues and Expenses 2 Statement of Changes in Net Assets 3 Statement 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 Statement of Financial Position As at March 31, $ $ ASSETS Current assets Cash (Note 3) 263, ,697 Short-term investments (Note 4) 11,489,708 10,963,943 Accounts receivable 837,630 1,012,207 Deferred rent receivable 36,820 43,867 Prepaid expenses and inventory 39, ,281 HST receivable ,666,955 12,354,245 Capital assets (Note 5) 922, ,425 13,589,880 13,288,670 LIABILITIES Current liabilities Accounts payable and accrued liabilities 462, ,022 Government remittances payable 130,920 22,904 Deferred revenue 9,732,751 9,526,034 10,326,611 9,995,960 NET ASSETS Unrestricted 813, ,131 Building Fund - internally restricted 599, ,978 KidSport Fund - internally restricted 264, ,197 Sport Fund - internally restricted 635, ,889 Net investment in capital assets 922, ,422 Restricted for capital asset replacement (Note 6) 27,093 27,093 3,263,269 3,292,710 13,589,880 13,288,670 Commitments (Note 8) ON BEHALF OF THE BOARD... Director Page 1 of 12

5 Statement of Revenues and Expenses Year ended March 31, $ $ Revenues Operating (Schedule 1) 1,209,827 1,200,487 Programs (Schedule 1) 6,258,869 5,605,906 7,468,696 6,806,393 Expenses Operating (Schedule 2) 1,300,077 1,127,921 Programs (Schedule 3) 6,103,412 5,379,776 7,403,489 6,507,697 Excess of revenues over expenses before amortization 65, ,696 Amortization 94,648 90,563 (Deficiency) excess of revenues over expenses (29,441) 208,133 Page 2 of 12

6 Statement of Changes in Net Assets Year ended March 31, 2014 March 31, 2014 Internally Restricted Restricted for Program Funds March 31, Net Investment Capital Asset Building KidSport Sport 2013 in Capital Assets Replacement Fund Fund Fund Unrestricted Total Total $ $ $ $ $ $ $ $ Beginning balance 934,422 27, , , , ,131 3,292,710 3,084,577 (Deficiency) excess of revenues over expenses (94,648) - 253,721 (36,718) 73,965 (225,761) (29,441) 208,133 Investment in capital assets 83,148 - (61,366) - (3,151) (18,631) - - Interfund transfers Transfer Building Fund to General Fund - - (310,000) , Rental revenue paid from General Fund to Building Fund , (180,656) - - Building management fee - - (18,300) , Closing balance 922,922 27, , , , ,383 3,263,269 3,292,710 Page 3 of 12

7 Statement of Cash Flows Year ended March 31, $ $ Operating activities (Deficiency) excess of revenues over expenses (29,441) 208,133 Item not affecting cash Amortization 94,648 90,563 Changes in non-cash working capital items (Note 10) 592,362 1,777, ,569 2,075,719 Investing activities Acquisition of capital assets (83,148) (59,387) Acquisition of short-term investments (525,765) (2,052,765) (608,913) (2,112,152) Net cash inflow (outflow) 48,656 (36,433) Cash, beginning of year 214, ,130 Cash, end of year 263, ,697 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. 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. 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. Page 5 of 12

9 Notes to the Financial Statements March, 31, ACCOUNTING POLICIES (continued) 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 3. CASH 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. 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. 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. Page 6 of 12

10 Notes to the Financial Statements March, 31, SHORT-TERM INVESTMENTS Short-term investments consist of one year GIC s and investment savings with a combined principal amount of $11,489,708 ( $10,963,943) which earn interest from 1% to 1.35%. The maturity dates of the GIC s range from April 2014 to January CAPITAL ASSETS March 31, Accumulated Net Book Net Book Cost Amortization Value Value $ $ $ $ Land 300, , ,000 Building 1,810,689 1,428, , ,894 Furniture and fixtures 812, , , ,220 Computer hardware and software 226, ,637 10,309 9,311 3,150,380 2,227, , , 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) related to this reserve. 7. 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. 8. COMMITMENTS The Organization leases office equipment under operating leases expiring in June Future lease payments aggregate $66,446 and are payable over the next 39 months. 9. CONTRIBUTED GOODS AND SERVICES During the year, Sport Nova Scotia recorded $454,049 ( $451,913) 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. Page 7 of 12

11 Notes to the Financial Statements March, 31, CHANGES IN NON-CASH WORKING CAPITAL ITEMS March 31, March 31, $ $ Decrease in accounts receivable 174, ,569 Decrease (increase) in deferred rent receivable 7,047 (2,228) Decrease (increase) in prepaid expenses and inventory 79,837 (72,560) Decrease (increase) in HST receivable 250 (250) Increase in accounts payable and accrued liabilities 15, ,801 Increase in government remittances payable 108,016 1,671 Increase in deferred revenue 206,717 1,552, ,362 1,777, 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. 12. 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, Harmonized Sales Tax Audit As a result of an audit conducted by the Canada Revenue Agency, the percentage of input tax credits Sport Nova Scotia is allowed to claim was reassessed. Sport Nova Scotia is eligible to claim 50% of the disallowed input tax credits through a public service body rebate. The result of the reassessment is $170,105 in net tax, interest and penalties for the period January 1, 2010 to March 31, Sport Nova Scotia intends to file a notice of objection (NOO) with the CRA to dispute the reassessment in June Page 8 of 12

12 Notes to the Financial Statements March, 31, FINANCIAL INSTRUMENTS 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. 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, 2014 SCHEDULE 1 Programs and Administrative Management Centre Total Budget (unaudited) $ $ $ $ Operating Grant - Province of Nova Scotia 227, , , ,000 Building 616, , ,965 Membership 8,775 9,500 18,275 18,275 Interest 18,037-18,037 15, , ,500 1,209,827 1,201,240 Programs Sport Fund 3,503,889 3,503,889 3,316,750 KidSport 687, , ,755 Canada Games 302, , ,000 Advocacy sponsorship 174, , ,725 Sport fair 126, , ,200 Sportscape 75,411 75,411 92,320 Sunsweep 104, , ,820 Youth leadership program 250, , ,000 RICOH awards 106, ,782 94,870 Provincial government funding - sport futures 378, , ,000 Administrative/accounting services 37,905 48,154 86,059 91,700 Postage/courier 29,146 29,146 37,000 Rental income 17,324 29,018 46,342 46,550 Printing/supplies 27,616 27,616 30,000 PSO contribution administrative support 45,118-45,118 40,000 Network services - 37,884 37,884 36,900 East coast classic 8,507-8,507 - Telecommunications - 17,749 17,749 16,000 DHW funding - sport fair 20,000-20,000 20,000 Sponsorship 16,680-16,680 21,850 Dragon boat 10,000-10,000 10,000 PSO sponsor program 10,000-10,000 10,000 Athlete recognition 6,448-6,448 5,000 DHW funding PSO professional development ,600 Merchandise sales DHW funding- PSO development initiatives 78,199-78,199 20,000 Volunteer recognition awards Corporate Games 108, ,551 97,410 6,069, ,567 6,258,869 5,938,350 Page 10 of 12

14 Schedule of Operating Expenses Year ended March 31, 2014 SCHEDULE 2 Programs and Administrative Management Centre Total Budget (unaudited) $ $ $ $ Salaries 443, , , ,400 Benefits 59,072 28,148 87, ,800 Building 362, , ,500 Office supplies 5,737 3,153 8,890 10,000 Professional fees 33,566 3,000 36,566 16,000 Advertising and public relations 12, ,296 7,250 Annual meeting/reports 3,651-3,651 6,000 Professional development 3,058-3,058 11,000 Board travel/meetings 6,184-6,184 6,000 Travel/meetings 5, ,988 8,000 Telecommunications 4,498-4,498 5,800 Parking 1,985-1,985 2,100 Postage/courier ,398 2,400 Temporary help 3,345 17,761 21,106 3,795 Printing 1, ,779 2,300 Interest and bank charges 1, ,619 2,350 Membership Fee 1,895-1,895 2,800 PSO meetings CCPTSF administrative expenses Donations ,300 Bad debts Abuse and harassment training ,000 Unrecoverable HST - Jan to Mar , ,015-1,063, ,602 1,300,077 1,188,495 Page 11 of 12

15 SCHEDULE 3 Schedule of Programs Expenses Year ended March 31, 2014 Programs and Administrative Management Centre Total Budget (unaudited) $ $ $ $ Sport fund 3,428,109 3,428,109 3,243,750 KidSport 723, , ,755 Canada Games 302, , ,000 Advocacy 157, , ,420 Sport futures 376, , ,000 Sport fair 140, , ,825 PSO administrative staff support 45,118 45,118 40,000 Youth leadership program 250, , ,500 Sportscape 63,002 63,002 80,665 Sunsweep 91,385 91, ,570 RICOH awards 101, ,048 89,620 Sport quarterly 68,336 68,336 71,020 Printing/supplies - 51,274 51,274 54,500 Postage/courier - 29,184 29,184 37,000 Management information system 2,633 42,053 44,686 45,000 Telecommunications - 18,445 18,445 16,000 Sponsor/member servicing 19,008 19,008 24,275 Dragon boat 10,000 10,000 10,000 PSO sponsor program 6,000 6,000 10,000 East coast classic Athlete recognition 5,431 5,431 3,700 PSO professional development ,600 Merchandise cost of sales Volunteer recognition awards PSO development initiatives 78,199 78,199 20,000 Health and safety program Corporate games 92,470 92,470 84,515 5,962, ,956 6,103,412 5,780,965 Page 12 of 12