Financial statements. Cancer Care Ontario. March 31, 2009

Transcription

1 Financial statements Cancer Care Ontario

2 Contents Page Auditors' Report 1 Statement of financial position 2 Statement of operations 3 Statement of changes in fund balances 4 Statement of cash flows

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4 Office of the Auditor General of Ontario Bureau du vérificateur general de I Ontario Auditor s Report To Cancer Care Ontario and to the Minister of Health and Long-Term Care I have audited the statement of financial position of Cancer Care Ontario as at March 31, 2009 and the statements of operations, changes in fund balances and cash flows for the year then ended. These financial statements are the responsibility of Cancer Care Ontario s management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I 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 my opinion, these financial statements present fairly, in all material respects, the financial position of Cancer Care Ontario as at and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Box 105, 15th Floor 20 Dundas Street West Gary R. Peall, CA Toronto, Ontario Toronto, Ontario Deputy Auditor General M5G 2C2 June 10, 2009 Licensed Public Accountant fax B.P. 105, me etage 20, rue Dundas ouest Toronto (Ontario) M5G 2C télécopleur

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6 Statement of operations Year ended Restricted General Total Revenue Ministry of Health and Long-Term Care $ - $ - $ 650,061 $ 586,740 $ 650,061 $ 586,740 Ministry of Health Promotion - - 3,061 2,889 3,061 2,889 Net investment income (loss) (Note 12) (3,382) 29 2,979 5,479 (403) 5,508 Amortization of deferred contributions related to capital assets (Note 9(b)) ,520 22,105 22,520 22,631 Other (Note 13) 10,558 7,409 8,019 13,211 18,577 20,620 7,176 7, , , , ,388 Expenses Integrated Cancer Programs Services 1,153 4, , , , ,482 Drugs , , , ,945 Medical services ,834 43,350 49,856 43,777 Salaries and benefits 3,183 2,002 39,494 28,191 42,677 30,193 Surgical services hospitals ,411 34,509 38,411 34,509 Consulting services (Note 14) ,333 47,765 29,998 48,282 Amortization of capital assets ,900 22,105 22,900 22,631 Other operating (Note 15) 1, ,845 11,921 15,406 12,635 Purchased Services 2,620 2,281 12,843 13,610 15,463 15,891 Other hospital cancer programs - - 9,178 8,242 9,178 8,242 Pension (Note 10(a)) - - 3,083 2,274 3,083 2,274 Occupancy costs ,001 1,914 3,035 2,012 Post-retirement benefits other than pension plan (Note 10(b)) ,238 10, , , , ,131 Excess (deficiency) of revenue over expenses $ (2,062) $ (2,932) $ 2,209 $ 189 $ 147 $ (2,743) See accompanying notes to the financial statements. 3

7 Statement of changes in fund balances Year ended Restricted Invested in Total Endowment Other Unrestricted capital assets Fund balances, beginning of year $ 2,317 $ 29,675 $ 12,593 $ - $ 44,585 $ 47,328 Excess (deficiency) of revenue over expenses - (2,062) 2, (2,743) Net change in investment in capital assets (Note11) - (600) (2,006) 2, Interfund transfers (Note 16) - (108) Fund balances, end of year $ 2,317 $ 26,905 $ 12,904 $ 2,606 $ 44,732 $ 44,585 See accompanying notes to the financial statements. 4

8 Statement of cash flows Year ended March Increase (decrease) in cash and cash equivalents Operating Excess (deficiency) of revenue over expenses $ 147 $ (2,743) Amortization of capital assets 22,900 22,631 Amortization of deferred contributions related to capital assets (22,520) (22,631) Realized loss on disposal of long-term investments 4,063 - Unrealized loss on long-term investments - 1,689 Benefit expense related to post-retirement benefits other than pension plan Post-retirement benefits other than pension plan paid (198) (244) 4,619 (1,040) Change in non-cash operating working capital 52,082 (8,470) 56,701 (9,510) Investing Long-term investments, net (5,680) (1,730) Purchase of capital assets (31,933) (43,171) Due from Community Foundations - 2,236 Amounts received related to capital assets 28,902 45,582 (8,711) 2,917 Increase (decrease) in cash and cash equivalents 47,990 (6,593) Cash and cash equivalents, beginning of year 124, ,813 Cash and cash equivalents, end of year $ 172,210 $ 124,220 See accompanying notes to the financial statements. 5

9 The Government of Ontario approved the establishment of Cancer Care Ontario (the Organization ) on April 29, 1997 to advance services for cancer patients to improve the outcome, quality and efficiency of cancer services. The cancer services encompass prevention, early detection, diagnosis, treatment, supportive care, research and education. The Organization was incorporated under the name of The Ontario Cancer Treatment and Research Foundation by an Act of the Legislature of the Province of Ontario in 1943 and the name of the Organization was changed in 1997 to Cancer Care Ontario. The Organization is a registered charity under the Income Tax Act (Canada). In accordance with the Cancer Program Integration Agreement ( CPIA ), the Organization funds the Integrated Cancer Programs ( ICP ) at various hospitals in return for agreed upon cancer treatment services. The Organization s mission is to improve the performance of the cancer treatment system in Ontario by driving quality, accountability and innovation in all cancer-related services. The Organization s mission includes an emphasis on performance management. 1. Significant accounting policies The Organization s financial statements are prepared by management using Canadian generally accepted accounting principles. Fund accounting The Endowment Fund reports contributions subject to externally imposed stipulations specifying that the resources contributed be maintained permanently, unless specifically disendowed by the donor. The Restricted Fund reports all other externally and internally restricted resources. The main use of these resources is for research and education. These funds include donations and grants which either have specific restrictions placed on their use by the donor or have been received by a particular cancer centre and are restricted for use by that particular cancer centre. The General Fund accounts for the Organization s Ministry of Health and Long-Term Care ( MOHLTC ) and the Ministry of Health Promotion s funded programs and administration activities. This fund reports unrestricted resources and restricted operating grants. Revenue recognition The Organization follows the deferral method of accounting for restricted contributions related to MOHLTC and Ministry of Health Promotion funded programs which are recognized as revenue of the General Fund in the year which the related expenses are incurred. The Organization follows the restricted fund method for all other restricted contributions which are recognized as revenue of the appropriate Restricted Fund in the year of receipt. Contributions for endowment are recognized as revenue of the Endowment Fund in the year of receipt. 6

10 1. Significant accounting policies (continued) Revenue recognition (continued) Restricted investment income earned on Endowment Fund resources is recognized as revenue of the Endowment Fund. Unrestricted contributions are recognized as revenue of the General Fund when the amount is reasonably estimated and collection is probable. Cash and cash equivalents The Organization considers deposits in banks, certificates of deposit and short-term investments with original maturities of three months or less as cash and cash equivalents. Investments Investments are classified as held for trading and carried at fair value. Investment transactions are accounted for on a settlement date basis and transaction costs are expensed as incurred. Capital assets Capital assets are recorded at cost. Contributions received for the purchase of capital assets are recorded as grants for capital assets and amortized on the same basis as the capital assets. All capital assets are amortized on a straight-line basis at 20% per annum. Land and buildings for four lodges donated by the Canadian Cancer Society Ontario Division are recorded at nominal value, as current value is not reasonably determinable. Pension costs and post retirement benefits other than pension plan (i) Pension costs The Organization accounts for its participation in the Hospitals of Ontario Pension Plan ( HOOPP ), a multiemployer defined benefit pension plan, as a defined contribution plan, as the Organization has insufficient information to apply defined benefit plan accounting. (ii) Post-retirement benefits other than pension plan The cost of post-retirement benefits other than pension plan is actuarially determined using the projected benefit method prorated on employment services and expensed as employment services are rendered. The transitional obligation arising from the adoption of this accounting policy is being amortized over the expected remaining life of eligible retirees. Remuneration of the Board of Directors and Board Committee Members Members of the Board of Directors and Board Committees are volunteers who serve without remuneration. 7

11 1. Significant accounting policies (continued) Use of estimates The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. 2. Changes in accounting disclosures Section 1535, Capital Disclosures requires additional disclosure of information about the Organization s objectives, policies and processes for managing capital, as well as quantitative data about capital and whether the entity has complied with externally imposed capital requirements. See Note 4 for disclosure. In last year s financial statements the Organization indicated it would be adopting Sections 3862 and 3863, Financial Instruments Disclosures and Presentations in the current year. During the year the Accounting Standards Board (AcSB) decided not-for-profit organizations may elect to use the disclosure requirements of Section 3861 instead of those in 3862, and could concurrently adopt 3863, but were not required to do so. Accordingly, the Organization has not adopted 3862 and Future accounting changes The CICA has released the following new Handbook standards which are applicable to the Organization effective April 1, 2009: Section 4400, Financial Statement Presentation, has been amended to permit a not-forprofit organization to present net assets invested in capital assets as a category of internally restricted net assets and clarification of presentation of revenue and expenses on a gross basis when the entity is acting as a principal in a transaction. Section 4460, Disclosure of Related Party Transactions, has been amended to align the definition of related parties to CICA section 3840, Related Party Transactions. Section 4470, Disclosure of Allocated Expenses, establishes disclosure standards for a not-for-profit organization that classifies its expenses by function and allocates its expenses to a number of functions to which the expenses relate. The Organization is currently in the process of assessing the impact of these new standards on its financial statements. Other new standards have been issued but they are not expected to have a material impact on the Organization s financial statements. 8

12 4. Capital Disclosures The capital structure of the Organization consists of fund balances comprised of endowment funds, internally and externally restricted funds, and unrestricted funds. The Organization s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide the appropriate level of benefits and services to its stakeholders. A portion of the Organization s capital is restricted in how it is to utilize its externally restricted contributions as described in Note 1. The Organization employs internal control processes to ensure the restrictions are met prior to the utilization of these resources and has been in compliance with these restrictions throughout the year. The Organization sets the amount of fund balances in proportion to risk, manages its capital structure and makes adjustments to it in light of economic conditions and the risk characteristics of the underlying assets. 5. Receivables Accounts receivable $ 4,031 $ 2,812 Due from MOHLTC 9,313 49,747 Due from Community Foundations Other $ 14,107 $ 53, Long-term investments The fair value of the Organization s long-term investments is as follows: Cash $ - $ 12 Guaranteed Investment Certificate, interest at 2.0%, maturing September 4, ,046 - Canadian equity - 5,517 Foreign equity - 5,660 Fixed income - 15,311 Money market fund - 1,929 $ 30,046 $ 28,429 9

13 7. Capital assets Accumulated Net Net Cost Amortization Book Value Book Value Therapeutic and other technical equipment $ 255,065 $ 170,723 $ 84,342 $ 76,646 Office furniture and equipment, and leasehold improvements 7,919 2,864 5,055 3,718 $ 262,984 $ 173,587 $ 89,397 $ 80,364 The cost of therapeutic equipment includes deposits of $25,655 ( $24,099). Amortization of these amounts will commence when the equipment is available for use. 8. Accounts payable and accrued liabilities Trade payables $ 59,142 $ 64,165 Accrued liabilities and other 51,995 43,598 Payable to MOHLTC 4,710 - $ 115,847 $ 107, Deferred contributions a) Deferred operating grants Deferred operating grants represent unspent resources related to MOHLTC and Ministry of Health Promotion funded programs. Unspent amounts are held for use in subsequent periods or settlement by the respective ministry. Changes in the deferred operating grant balance are as follows: Balance, beginning of year $ 39,983 $ 33,708 Amounts received related to subsequent periods 37,343 26,335 Amount recognized as revenue (23,286) (19,107) Amount returned to MOHLTC (9,391) (953) Balance, end of year $ 44,649 $ 39,983 10

14 9. Deferred contributions (continued) b) Deferred contributions related to capital assets Deferred contributions related to capital assets represent the unamortized amount and unspent amount of funds received for the purchase of capital assets. The amortization of deferred contributions related to capital assets is recognized as revenue in the statement of operations. Contributions are amortized on a straight-line basis at 20% per annum. The changes in the deferred contributions related to capital assets balance for the year are as follows: Balance, beginning of year $ 90,824 $ 67,873 Amounts received related to capital assets 28,902 45,582 Amount recognized as revenue (22,520) (22,631) Balance, end of year $ 97,206 $ 90,824 The balance of deferred capital contributions related to capital assets consists of the following: Unamortized capital contributions used to purchase capital assets $ 86,791 $ 80,364 Unspent contributions 10,415 10,460 Balance, end of year $ 97,206 $ 90,824 During the year $12,379 ( $15,147) of capital funding received from MOHLTC was provided to hospitals to fund hospital capital purchases. Accordingly these amounts have not been reflected above or in these financial statements. 10. Pension costs and post-retirement benefits other than pension plan a) Pension costs Employees of the Organization are members of HOOPP, which is a multiemployer defined benefit pension plan. HOOPP members receive benefits based on length of service and the average annualized earnings during the five consecutive years that provide the highest earnings prior to retirement, termination or death. Contributions to HOOPP made during the year by the Organization on behalf of its employees amounted to $3,083 ( $2,274) and are included in the pension expense in the statement of operations. b) Post-retirement benefits other than pension plan The Organization offered non-pension, post retirement benefits to its retired employees. Effective January 1, 2006, the Organization no longer offers non-pension, post retirement benefits to its active employees. Benefits paid during the year under this unfunded plan were $198 ( $244). 11

15 10. Pension costs and post-retirement benefits other than pension plan (continued) During the year, the Organization increased its accrued benefit obligation by $81 (2008 decreased by $543) based on the most recent actuarial valuation for the post-retirement benefits other than pension plan dated April 9, The next valuation will take place in April Information about the Organization s post-retirement benefits other than pension plan is as follows: Accrued benefit obligation $ (3,408) $ (3,327) Unamortized actuarial gain (716) (839) Unamortized net transitional obligation Net accrued benefit liability $ (3,326) $ (3,297) The actuarially determined present value of the accrued benefit obligation is measured using management s best estimates based on assumptions that reflect the most probable set of economic circumstances and planned courses of action as follows: Discount rate 5.5% 6% Hospital and drug cost trend rate 9% in % in 2008 to 5% in 2013 to 5% in 2013 and after and after Other medical costs trend rate 4% per annum 4% per annum 11. Invested in capital assets Capital assets $ 89,397 $ 80,364 Amounts financed by deferred capital contributions (86,791) (80,364) Change in net assets invested in capital assets is calculated as follows: $ 2,606 $ - Purchase of capital assets $ 31,933 $ 43,171 Deferred contributions related to capital assets (28,947) (43,171) Amortization of deferred contributions related to capital assets 22,520 22,631 Amortization of capital assets (22,900) (22,631) $ 2,606 $ - 12

16 12. Net investment income (loss) Net investment income earned on the Endowment Fund resources in the amount of $18 ( $51) is included in the Restricted Fund. Also included in restricted net investment income is realized and unrealized losses on investments of $3,400 ( $22). 13. Other revenue General Fund Canada Health Infoway $ 1,938 $ 10,293 Salary recovery 1,640 1,407 Miscellaneous 4,441 1,511 $ 8,019 $ 13,211 Restricted Fund Grants $ 10,333 $ 7,106 Donations $ 10,558 $ 7, Wait Time Information System At the direction of the MOHLTC, the Organization was engaged to develop and implement Ontario s Wait Time Strategy (the Strategy ), including obtaining data on wait times for selected major health care services at participating Ontario hospitals. The Organization manages the Wait Times Information System, an information technology component of the Strategy. The MOHLTC provides funding dedicated to the Strategy. The costs related to the Strategy totalled $31,455 ( $41,951) and are included in various categories in the statement of operations. Total expenses related to the Strategy since its inception in the 2005/06 fiscal year are $124,812. Total funding supporting the Strategy since inception is $142,004. Consulting services includes $18,085 ( $31,972) related to the Strategy. 13

17 15. Other operating expenses Restricted Fund Equipment $ 679 $ 71 Education & Publications Travel General Office Other Expenses $ 1,561 $ 714 General Fund Equipment $ 7,637 $ 5,417 General Office 1,562 1,288 Education & Publications 1,378 1,496 Other Expenses 1,328 1,690 Travel 1,140 1,230 Patient Services $ 13,845 $ 11, Interfund transfers Transfer to (from) the General Fund from (to) the Restricted Fund $ 108 $ (143) Transfers to the General Fund from the Restricted Fund represent the release of internally restricted reserves. Transfers to the Restricted Fund from the General Fund represent internally restricted reserves. 17. Commitments a) The Organization leases space, and computer and office equipment. Under the terms of the leases, future repayments are estimated as follows for the year ending March 31: 2010 $ 3, , , , $ 10,725 b) The Organization has committed to approximately $15,372 for the purchase of equipment. 14

18 18. Contingency The Organization is a member of the Healthcare Insurance Reciprocal of Canada ( HIROC ), which was established by hospitals and other organizations to self-insure. If the aggregate premiums paid are not sufficient to cover claims, the Organization will be required to provide additional funding on a participatory basis. Since the inception, HIROC has accumulated an unappropriated surplus, which is the total of premiums paid by all subscribers plus investment income less the obligation for claims reserves and expenses and operating expenses. Each subscriber which has an excess of premium plus investment income over the obligation for their allocation of claims reserves and expenses and operating expenses may be entitled to receive distributions of their share of the unappropriated surplus at the time such distributions are declared by the Board of Directors of HIROC. There are nil distributions receivable from HIROC as of. 19. Financial instruments The carrying amounts of cash and cash equivalents, receivables and accounts payable and accrued liabilities approximate fair values due to the short-term nature of these instruments. The fair values of long-term investments are disclosed in Note 6. Long-term investments consist of guaranteed investment certificates with a fixed interest rate. The carrying value of these investments approximates fair value as they bear an interest rate that in management s estimation is at market. 20. Guarantees a) Director/officer indemnification The Organization s General By-Law contains an indemnification of its directors/officers, former directors/officers and other persons who have served on board committees against all costs incurred by them in connection with any action, suit or other proceeding in which they are sued as a result of their service, as well as all other costs sustained in or incurred by them in relation to their service. This indemnity excludes costs that are occasioned by the indemnified party s own dishonesty, wilful neglect or default. The nature of the indemnification prevents the Organization from making a reasonable estimate of the maximum amount that it could be required to pay to counterparties. To offset any potential future payments, the Organization has purchased from HIROC directors and officers liability insurance to the maximum available coverage. The Organization has not made any significant payments under such indemnifications, and no amount has been accrued in the accompanying financial statements with respect to the contingent aspect of these indemnities. 15

19 20. Guarantees (continued) b) Other indemnification agreements In the normal course of its operations, the Organization executes agreements that provide for indemnification to third parties. These include, without limitation: indemnification of the Landlord under the Organization s lease of premises; indemnification of the Minister of Health and Long-Term Care from claims, actions, suits or other proceedings based upon the actions or omissions of the representative groups of medical, radiation and gynaecology/oncology physicians under certain Alternate Funding Agreements; and indemnification of the ICP host hospitals from claims, actions, costs, damages and expenses brought about as a result of any breach by the Organization of its obligations under the Cancer Program Integration Agreement and the related closing documentation. While the terms of these indemnities vary based upon the underlying contract, they normally extend for the term of the contract. In most cases, the contract does not provide a limit on the maximum potential amount of indemnification, which prevents the Organization from making a reasonable estimate of its maximum potential exposure. The Organization has not made any significant payments under such indemnifications, and no amount has been accrued in the accompanying financial statements with respect to the contingent aspect of these indemnities. 21. Comparative figures Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year. 16