School District No. 47 (Powell River)

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1 Audited Financial Statements of School District No. 47 (Powell River) June 30, 2014 October 01, :30

2 School District No. 47 (Powell River) June 30, 2014 Table of Contents Management Report... 1 Independent Auditor's Report... 2 Statement of Financial Position - Statement Statement of Operations - Statement Statement of Change in Net Financial Assets (Debt) - Statement Statement of Cash Flows - Statement Notes to the Financial Statements Schedule of Changes in Accumulated Surplus (Deficit) by Fund - Schedule Schedule of Operating Operations - Schedule Schedule 2A - Schedule of Operating Revenue by Source Schedule 2B - Schedule of Operating Expense by Object Schedule 2C - Operating Expense by Function, Program and Object Schedule of Special Purpose Operations - Schedule Schedule 3A - Changes in Special Purpose Funds and Expense by Object Schedule of Capital Operations - Schedule Schedule 4A - Tangible Capital Assets Schedule 4B - Tangible Capital Assets - Work in Progress Schedule 4C - Deferred Capital Revenue Schedule 4D - Changes in Unspent Deferred Capital Revenue October 01, :30

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4 Independent Auditors' Report To the Board of Education of School District No. 47 (Powell River) and the Minister of Education: We have audited the accompanying financial statements of School District No. 47 (Powell River), which comprise the statement of financial position as at June 30, 2014 and the statements of changes in net financial assets (debt), operations, cash flows and remeasurement gains and losses for the year ended June 30, 2014 and a summary of significant accounting policies and other explanatory information. Management s Responsibility for Financial Statements Management is responsible for the preparation and presentation of these financial statements in accordance with the financial reporting framework based on Section 23.1 of the Budget Transparency and Accountability Act and the Province of British Columbia s Treasury Board Regulations 257/2010 and 198/2011, 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 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 of 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 auditors 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 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 is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present the financial position of School District No. 47 (Powell River) as at June 30, 2014 and the results of its operations, changes in net financial assets (debt), cash flows and remeasurement gains and losses for the year then ended in compliance with, in all material respects, the financial reporting framework based on Section 23.1 of the Budget Transparency and Accountability Act and the Province of British Columbia s Treasury Board Regulations 257/2010 and 198/2011. Emphasis of Matter We draw attention to Note 2 which describes the financial reporting framework being followed by School District No. 47 (Powell River). Other Matter We draw attention to the Supplementary Financial Information included in Schedules 1 to 4D which has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on Campbell River, British Columbia September 30, 2014 Chartered Accountants Accounting Consulting Tax 201, 990 Cedar Street; Campbell River BC; V9W 7Z8 P: F:

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6 School District No. 47 (Powell River) Statement of Operations Year Ended June 30, 2014 Statement Budget Actual Actual (Recast - Note 8) $ $ $ Revenues Provincial Grants Ministry of Education 21,995,990 22,015,671 22,673,135 Other 70,000 90, ,128 Federal Grants 277, ,509 78,434 Tuition 310, , ,059 Other Revenue 3,141,277 3,150,514 3,397,821 Rentals and Leases 48,000 74,396 57,850 Investment Income 36,000 53,945 42,771 Gain (Loss) on Disposal of Tangible Capital Assets 304,811 Amortization of Deferred Capital Revenue 859, , ,341 Total Revenue 26,737,688 27,369,352 27,502,539 Expenses Instruction 21,519,607 21,196,456 21,743,049 District Administration 1,028, , ,048 Operations and Maintenance 4,014,026 4,185,100 4,249,889 Transportation and Housing 750, , ,749 Total Expense 27,312,118 27,166,170 27,734,735 Surplus (Deficit) for the year (574,430) 203,182 (232,196) Accumulated Surplus (Deficit) from Operations, beginning of year 10,256,235 10,488,431 Accumulated Surplus (Deficit) from Operations, end of year 10,459,417 10,256,235 Version: October 01, :30 The accompanying notes are an integral part of these financial statements. Page 4

7 School District No. 47 (Powell River) Statement of Changes in Net Financial Assets (Debt) Year Ended June 30, 2014 Statement Budget Actual Actual (Recast - Note 8) $ $ $ Surplus (Deficit) for the year (574,430) 203,182 (232,196) Effect of change in Tangible Capital Assets Acquisition of Tangible Capital Assets (600,000) (690,315) (9,410,166) Amortization of Tangible Capital Assets 1,041,596 1,186,540 1,041,196 Net carrying value of Tangible Capital Assets disposed of 5,000 Total Effect of change in Tangible Capital Assets 441, ,225 (8,368,970) Acquisition of Prepaid Expenses (6,822) (36,329) Total Effect of change in Other Non-Financial Assets - (6,822) (36,329) (Increase) Decrease in Net Financial Assets (Debt), before Net Remeasurement Gains (Losses) (132,834) 697,585 (8,637,495) Net Remeasurement Gains (Losses) (Increase) Decrease in Net Financial Assets (Debt) 697,585 (8,637,495) Net Financial Assets (Debt), beginning of year (36,318,965) (27,681,470) Net Financial Assets (Debt), end of year (35,621,380) (36,318,965) Version: October 01, :30 The accompanying notes are an integral part of these financial statements. Page 5

8 School District No. 47 (Powell River) Statement of Cash Flows Year Ended June 30, Actual Actual (Recast - Note 8) $ $ Operating Transactions Surplus (Deficit) for the year 203,182 (232,196) Changes in Non-Cash Working Capital Decrease (Increase) Accounts Receivable 816,273 1,227,617 Prepaid Expenses (6,822) (36,329) Increase (Decrease) Accounts Payable and Accrued Liabilities (662,760) (411,728) Unearned Revenue 95,447 35,487 Deferred Revenue 88,753 31,446 Employee Future Benefits (25,074) (23,264) Loss (Gain) on Disposal of Tangible Capital Assets (304,811) Amortization of Tangible Capital Assets 1,186,540 1,041,196 Amortization of Deferred Capital Revenue (996,721) (859,341) Total Operating Transactions 394, ,888 Capital Transactions Tangible Capital Assets Purchased (428,430) (2,353,972) Tangible Capital Assets -WIP Purchased (261,885) (7,056,194) District Portion of Proceeds on Disposal 309,811 Total Capital Transactions (380,504) (9,410,166) Financing Transactions Capital Revenue Received 648,057 9,001,472 Total Financing Transactions 648,057 9,001,472 Net Increase (Decrease) in Cash and Cash Equivalents 661, ,194 Cash and Cash Equivalents, beginning of year 4,027,131 3,662,937 Cash and Cash Equivalents, end of year 4,688,691 4,027,131 Cash and Cash Equivalents, end of year, is made up of: Cash 4,688,691 4,027,131 4,688,691 4,027,131 Statement 5 Version: October 01, :30 The accompanying notes are an integral part of these financial statements. Page 6

9 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 1 AUTHORITY AND PURPOSE The School District under authority of the School Act of British Columbia is a corporation under the name of "The Board of Education of School District No. 47 (Powell River)", and operates as "School District No. 47 (Powell River)." A board of education (Board) elected for a three-year term governs the School District. The School District provides educational programs to students enrolled in schools in the district, and is principally funded by the Province of British Columbia through the Ministry of Education. The School District is exempt from tax. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES a) Basis of Accounting These financial statements have been prepared in accordance with Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia. This Section requires that the financial statements be prepared in accordance with Canadian public sector accounting standards except in regard to the accounting for government transfers as set out in Notes 2(g) and 2(k). In November 2011, Treasury Board provided a directive through Restricted Contributions Regulation 198/2011 providing direction for the reporting of restricted contributions whether they are received or receivable by the School District before or after this regulation was in effect. As noted in notes 2 (g) and 2 (k), Section 23.1 of the Budget Transparency and Accountability Act and its related regulations require the School District to recognize government transfers for the acquisition of capital assets into revenue on the same basis as the related amortization expense. As these transfers do not contain stipulations that create a liability, Canadian public sector accounting standards would require these grants to be fully recognized into revenue. The impact of this difference on the financial statements of the School District is as follows: Year-ended June 30, decrease in annual surplus by $1,917,349 June 30, increase in accumulated surplus and decrease in deferred contributions by $37,257,831 Year-ended June 30, 2014 increase in annual surplus by $428,430 June 30, 2014 increase in accumulated surplus and decrease in deferred contributions by $36,951,425 7

10 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) b) Cash and Cash Equivalents Cash and cash equivalents include cash and highly liquid securities with original terms to maturity of three months or less when purchased. c) Accounts Receivable Accounts Receivable are measured at amortized costs and shown net of allowance for doubtful accounts (see Note 3). d) Prepaid Expenses Insurance premiums, and software licensing and support, are included as a prepaid expense and stated at acquisition cost and are charged to expense over the periods expected to benefit from it. e) Capital Assets The following criteria apply: Capital assets acquired or constructed are recorded at cost. Donated capital assets are recorded at their fair market value on the date of donation. Work-in-progress is recorded as an acquisition to the applicable asset class at substantial completion. Sites and buildings that no longer contribute to the ability of the district to provide services are written-down to residual value. Buildings that are demolished or destroyed are written-off. Work-in-progress is not amortized until after the asset has been completed or put into use. Amortization is recorded on a straight-line basis over the estimated useful life of the asset and commences the year following acquisition. Estimated useful life is as follows: Buildings 40 years Furniture & Equipment 10 years Vehicles 10 years Computer Hardware 5 years 8

11 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) f) Unearned Revenue Unearned revenue includes tuition fees received for courses to be delivered in future periods and receipt of proceeds for services or products to be delivered in a future period. Revenue will be recognized in that future period when the courses, services, or products are provided. g) Deferred Revenue and Deferred Capital Revenue Deferred revenue includes contributions received with stipulations that meet the description of restricted contributions in the Restricted Contributions Regulation 198/2011 issued by Treasury Board. When restrictions are met, deferred revenue is recognized as revenue in the fiscal year in a manner consistent with the circumstances and evidence used to support the initial recognition of the contributions received as a liability as detailed in Note 2 (k). Funding received for the acquisition of depreciable tangible capital assets is recorded as deferred capital revenue and amortized over the life of the asset acquired as revenue in the statement of operations. This accounting treatment is not consistent with the requirements of Canadian public sector accounting standards which require that government transfers be recognized as revenue when approved by the transferor and eligibility criteria have been met unless the transfer contains a stipulation that creates a liability in which case the transfer is recognized as revenue over the period that the liability is extinguished. See note 2(a) for the impact of this policy on these financial statements. h) Financial Instruments A contract establishing a financial instrument creates, at its inception, rights and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. The School District recognizes a financial instrument when it becomes a party to a financial instrument contract. Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and other liabilities. All financial assets and liabilities are recorded at cost or amortized cost and the associated transaction costs are added to the carrying value of these investments upon initial recognition. Transaction costs are incremental costs directly attributable to the acquisition or issue of a financial asset or a financial liability. 9

12 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) h) Financial Instruments (continued) Unrealized gains and losses from changes in the fair value of financial instruments are recognized in the statement of remeasurement gains and losses. Upon settlement, the cumulative gain or loss is reclassified from the statement of remeasurement gains and losses and recognized in the statement of operations. Interest and dividends attributable to financial instruments are reported in the statement of operations. All financial assets except derivatives are tested annually for impairment. When financial assets are impaired, impairment losses are recorded in the statement of operations. A writedown of a portfolio investment to reflect a loss in value is not reversed for a subsequent increase in value. For financial instruments measured using amortized cost, the effective interest rate method is used to determine interest revenue or expense. i) Use of Estimates Preparation of financial statements in accordance with the basis of accounting described in note 2(a) requires management to make estimates and assumptions that impact reported amounts for assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. Significant areas requiring the use of management estimates relate to the impairment of assets, rates for amortization, allowance for doubtful accounts, and estimated employee future benefits. Actual results could differ from those estimates. 10

13 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) j) Employee Future Benefits The School District provides certain post-employment benefits including vested and nonvested benefits for certain employees pursuant to certain contracts and union agreements. The School District accrues its obligations and related costs including both vested and non-vested benefits under employee future benefit plans. Benefits include vested sick leave, accumulating non-vested sick leave, early retirement, retirement/severance, vacation, overtime and death benefits. The benefits cost is actuarially determined using the projected unit credit method pro-rated on service and using management s best estimate of expected salary escalation, termination rates, retirement rates and mortality. The discount rate used to measure obligations is based on the cost of borrowing. The cumulative unrecognized actuarial gains and losses are amortized over the expected average remaining service lifetime (EARSL) of active employees covered under the plan. The most recent valuation of the obligation was performed at March 31, 2013 and projected to June 30, The next valuation will be performed at March 31, 2016 for use at June 30, For the purposes of determining the financial position of the plans and the employee future benefit costs, a measurement date of March 31 was adopted for all periods subsequent to July 1, The School District and its employees make contributions to the Teachers Pension Plan and Municipal Pension Plan. The plans are multi-employer plans where assets and obligations are not separated. The costs are expensed as incurred. k) Revenue Recognition Revenues are recognized in the period in which the transactions or events occurred that gave rise to the revenues. All revenues are recorded on an accrual basis, except when the accruals cannot be determined with a reasonable degree of certainty or when their estimation is impracticable. Contributions received or where eligibility criteria have been met are recognized as revenue except where the contribution meets the criteria for deferral as described below. Eligibility criteria are the criteria that the School District has to meet in order to receive the contributions including authorization by the transferring government. For contributions subject to a legislative or contractual stipulation or restriction as to their use, revenue is recognized as follows: 11

14 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) k) Revenue Recognition (continued) Non-capital contributions for specific purposes are recorded as deferred revenue and recognized as revenue in the year related expenses are incurred, Contributions restricted for site acquisitions are recorded as revenue when the sites are purchased, and Contributions restricted for tangible capital assets acquisitions other than sites are recorded as deferred capital revenue and amortized over the useful life of the related assets. Donated tangible capital assets other than sites are recorded at fair market value and amortized over the useful life of the assets. Donated sites are recorded as revenue at fair market value when received or receivable. The accounting treatment for restricted contributions is not consistent with the requirements of Canadian public sector accounting standards which require that government transfers be recognized as revenue when approved by the transferor and eligibility criteria have been met unless the transfer contains a stipulation that meets the criteria for liability recognition in which case the transfer is recognized as revenue over the period that the liability is extinguished. See note 2(a) for the impact of this policy on these financial statements. Revenue related to fees or services received in advance of the fee being earned or the service is performed is deferred and recognized when the fee is earned or service performed. Investment income is reported in the period earned. When required by the funding party or related Act, investment income earned on deferred revenue is added to the deferred revenue balance. l) Expenditures Expenses are reported on an accrual basis. The cost of all goods consumed and services received during the year is expensed. Categories of Salaries o Principals, Vice Principals, and Directors of Instruction employed under an administrative officer contract are categorized as Principals and Vice Principals. 12

15 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) l) Expenditures (continued) o Superintendents, Assistant Superintendents, Secretary-Treasurers, Trustees and other employees excluded from union contracts are categorized as Other Professionals. Allocation of Costs o Operating expenses are reported by function, program, and object. Whenever possible, expenditures are determined by actual identification. Additional costs pertaining to specific instructional programs, such as special and aboriginal education, are allocated to these programs. All other costs are allocated to regular programs. o Actual salaries of personnel assigned to two or more functions or programs are allocated based on the time spent in each function and program. School-based clerical salaries are allocated to school administration and partially to other programs to which they may be assigned. Principals and Vice Principals salaries are allocated to school administration and may be partially allocated to other programs to recognize their other responsibilities. o Employee benefits and allowances are allocated to the same programs, and in the same proportions, as the individual s salary. o Supplies and services are allocated based on actual identification of program. m) Going Concern disclosure The School District has implemented Handbook Section 1400, General Standards of Financial Statement Presentation. This standard includes requirements for management to assess and disclose an entity s ability to continue as a going concern. Management has made its assessment and concluded there is no issue regarding the School District s ability to continue as a going concern based on the assumption that the current funding levels are maintained and any committed additional future funding is received. If there are significant declines in funding, expenses will be adjusted to match committed funding. n) Statement of Remeasurement Gains and Losses A statement of re-measurement gains and losses has not been presented as the District does not hold any financial assets or liabilities that would give rise to remeasurement gains or losses. 13

16 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (Continued) o) Future Change in Accounting Policies In June 2010, the Public sector Account Board (PSAB) issued PS 3260 Liability for Contaminated Sites to establish recognition, measurement and disclosure standards for liabilities associated with the remediation of contaminated sites. The new section defines activities included in a liability for remediation, establishes when to recognize and how to measure a liability for remediation, and provides the related financial statement presentation and disclosure requirements. PS 3260 is effective for fiscal years beginning on or after April 1, The District does not expect the adoption of the new section to have a material impact on its financial statements. NOTE 3 ACCOUNTS RECEIVABLE Due from Province Ministry of Education $ 250,000 $ 102,627 Due from LEA 0 832,545 Due from Others 465, ,841 Allowance for Doubtful Accounts $ 715,740 $ 1,532,013 NOTE 4 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Trade Payables Wages Payable Holdback Payable Deductions Payable $ 820, , , ,430 $ 758, ,274, ,166 $ 2,059,127 $ 2,721,887 14

17 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 5 TANGIBLE CAPITAL ASSETS June 30, 2014 Balance at July 1, Transfers (WIP) Balance at June 30, Cost: 2013 Additions Disposals 2014 Sites $ 4,043,922 $ $ (5,000) $ $ 4,038,922 Buildings 40,990, ,474 ( 270,000) 17,182,097 58,281,783 Buildings work in progress 17,182, ,885 (17,182,097) 261,885 Furniture & Equipment 992,719 48,956 1,041,675 Vehicles 1,472,666 1,472,666 Computer Hardware 115,634 (25,216) 90,418 Computer Software 40,055 40,055 Total $ 64,837,305 $ 690,315 $ (300,216) $ 0 $ 65,227,404 Balance at July 1, Balance at June 30, 2014 Accumulated Amortization: 2013 Additions Disposals Sites $ - $ $ $ - Buildings 17,652, ,863 (270,000) 18,291,467 Furniture & Equipment 295,630 99, ,902 Vehicles 321, , ,461 Computer Hardware 20,173 23,127 (25,216) 18,084 Computer Software 16,022 8,011 24,033 Total $18,305,623 $ 1,186,540 $ (295,216) $ 19,196,947 June 30, 2013 Balance at July 1, Transfers (WIP) 15 Balance at June 30, 2013 Cost: 2012 Additions Disposals Sites $ 4,043,922 $ $ $ 4,043,922 Buildings 39,163,871 1,189, ,753 40,990,212 Buildings work in progress 10,762,656 7,056,194 (636,753) 17,182,097 Furniture & Equipment 700, , ,719 Vehicles 824, ,712 (133,519) 1,472,666 Computer Hardware 54,202 90,419 (28,987) 115,634 Computer Software 40, ,055 Total $55,589,645 $9,410,166 $ (162,506) $ 0 $64,837,305 Balance at July 1, Balance at June 30, 2013 Accumulated Amortization: 2012 Additions Disposals Sites $ - $ $ $ - Buildings 16,782, ,850 17,652,604 Furniture & Equipment 225,583 70, ,630 Vehicles 372,266 82,447 (133,519) 321,194 Computer Hardware 38,319 10,841 (28,987) 20,173 Computer Software 8,011 8,011 16,022 Total $ 17,426,933 $ 1,041,196 $ (162,506) $18,305,623

18 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 Net Book Value: Net Book Value June 30, 2014 Net Book Value June 30, 2013 Sites $ 4,038,922 $ 4,043,922 Buildings 39,990,316 23,337,608 Buildings work in progress 261,885 17,182,097 Furniture & Equipment 646, ,089 Vehicles 1,004,205 1,151,472 Computer Hardware 72,334 95,461 Computer Software 16,022 24,033 Total $ 46,030,457 $ 46,531,682 NOTE 6 UNEARNED REVENUE (Note - formerly Deferred Revenue) Unearned revenue consists of contributions received for services to be delivered in a future period. Changes in unearned revenue are as follows: June 30, 2014 June 30,2013 Balance, beginning of year $186,872 $151,385 Changes for the year: Increase: Tuition fees 182, ,872 Other 97, , ,257 Decrease: Tuition fees 184, ,385 Net changes for the year 95,447 35,487 Balance, end of year $282,319 $186,872 16

19 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 7 DEFERRED REVENUE (Note - formerly Deferred Contributions) Deferred revenue includes unspent grants and contributions received that meet the description of a restricted contribution in the Restricted Contributions Regulation 198/2011 issued by Treasury Board, i.e., the stipulations associated with those grants and contributions have not yet been fulfilled. Operating Fund Special Purpose Fund 2014 Total 2013 Total Balance, beginning of year $ 0 $ 399,063 $ 399,063 $367,617 Increases: Provincial Grant Ministry of Ed $1,997,756 $1,997,756 $2,061,638 Federal Grants 248, ,000 40,000 Other 2,002,836 2,002,836 1,936,372 Investment income $ 4,248,887 4,248,887 4,038,010 Decreases: Transfers to Revenue 4,160,134 4,160,134 4,006,564 Net Changes for the year 88,753 88,753 31,446 Balance, end of the year $ 0 $ 487,816 $ 487,816 $ 399,063 NOTE 8 PRIOR PERIOD ADJUSTMENT In prior years school districts reported annual Employee Future Benefit (EFB) expense equal to the 12 months ended March 31 expenses as determined by the actuary rather than the 12 months ended June 30. An adjustment was made to increase the Employee Future Benefit (EFB) liability to include benefits expense incurred after the early measurement date of March 31 (see Note 10). The June 30, 2013 EFB liability increased by $15,992 representing the EFB expenses April 1 to June 30, The opening surplus as at July 1, 2012 was decreased by $1,400 representing the April 1 June 2012 EFB expenses. The surplus (deficit) for the year ended June 30, 2013 was increased (decreased) by $14,592 representing the April 1 June 2013 EFB expense minus the April 1 June 2012 EFB expense. 17

20 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 9 DEFERRED CAPITAL REVENUE (Note - formerly Deferred Capital Contributions) Deferred capital revenue includes grants and contributions received that are restricted by the contributor for the acquisition of tangible capital assets that meet the description of a restricted contribution in the Restricted Contributions Regulation 198/2011 issued by Treasury Board. Once spent, the contributions are amortized into revenue over the life of the asset acquired. Changes to deferred capital revenue are as follows: Deferred Cap Revenue Unspent Def. Cap Revenue Total Balance, beginning of year $ 37,257,831 $ 778,818 $ 38,036,649 $ 29,894,518 Increases: Transfers from DC - capital additions 428, ,430 1,917,349 Transfers from DC WIP 16,407,415 16,407, ,753 Provincial Grants MEd 338, ,246 9,001,472 Provincial Grants Other Other Revenue 309, ,811 16,835, ,057 17,483,902 11,555,574 Decreases: Amortization 996, , ,341 Transfers to DCR - Capital Additions 428, ,430 1,917,349 Transfers to DCR WIP 261, ,885 7,056,194 Transfers to capital expense 996, ,315 1,687,036 9,832,884 WIP (Net) (16,145,530) (16,145,530) 6,419,441 Balance, end of the year $36,951,425 $ 736,560 $ 37,687,985 $ 38,036,649 18

21 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 10 EMPLOYEE FUTURE BENEFITS Benefits include vested sick leave, accumulating non-vested sick leave, early retirement, retirement/severance, and death benefits. Funding is provided when the benefits are paid and accordingly, there are no plan assets. Although no plan assets are uniquely identified, the School District has provided for the payment of these benefits. The period of amortization is equal to the expected average remaining service lifetime (EARSL) of active employees (Recast-Note 8) Reconciliation of Accrued Benefit Obligation Accrued Benefit Obligation April 1 675,450 $ 586,785 Service Cost 43,739 33,782 Interest Cost 20,227 24,586 Benefit Payments (68,053) (106,790) Actuarial (Gain)/Loss (32,550) 137,087 Accrued Benefit Obligation March 31 $ 638,813 $ 675,450 Reconciliation of Funded Status at End of Fiscal Year Accrued Benefit Obligation March 31 $ 638,813 $ 675,450 Funded Status - Surplus/(Deficit) (638,813) (675,450) Employer Contributions After Measurement Date Benefit Expense After Measurement Date 41,152 (16,180) 2,879 (15,992) Unamortized Net Actuarial (Gain)/Loss 105, ,926 Accrued Benefit Asset/(Liability) June 30 $ (508,564) $ (533,636) Reconciliation of Change in Accrued Benefit Liability Accrued Benefit Liability (Asset) July 1 $ 533,636 $ 542,310 Recognize Benefit Expense April 1-June 30, ,592 Accrued Benefit Liability (Asset) July 1 (restated) 533, ,902 Net Expense for Fiscal Year 81,254 62,280 Employer Contributions (106,326) (85,546) Accrued Benefit Asset/(Liability) June 30 $ (508,564) $ ( 533,636) Components of Net Benefit Expense Service Cost $ 43,717 $ 36,271 Interest Cost 20,438 23,496 Amortization of Net Actuarial (Gain)/Loss 17,096 2,513 Net Benefit Expense (Income) $ 81,251 $ 62,280 19

22 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 10 EMPLOYEE FUTURE BENEFITS (Continued) The significant actuarial assumptions adopted for measuring the School District s accrued benefit obligations are: Discount Rate April % 4.25% Discount Rate March % 3.00% Long Term Salary Growth April % + seniority 2.50% + seniority Long Term Salary Growth March % + seniority 2.50% + seniority EARSL March NOTE 11 EMPLOYEE PENSION PLANS The school district and its employees contribute to the Teachers Pension Plan and Municipal Pension Plan, jointly trusteed pension Plans. The board of trustees for these plans represents plan members and employers and is responsible for the management of the pension plan including investment of the assets and administration of benefits. The pension plans are multi-employer contributory pension plans. Basic pension benefits provided are based on a formula. The Teachers Pension Plan has about 45,000 active members from school districts, and approximately 32,000 retired members from school districts. The Municipal Pension Plan has about 179,000 active members, of which approximately 24,000 are from school districts. Every three years, an actuarial valuation is performed to assess the financial position of the plans and the adequacy of plan funding. The most recent actuarial valuation of the Teachers Pension Plan as at December 31, 2011 indicated an $855 million funding deficit for basic pension benefits. The next valuation will be as at December 31, 2014 with results available in The most recent actuarial valuation for the Municipal Pension Plan as at December 31, 2012 indicated a $1. 37 billion funding deficit for basic pension benefits. The next valuation will be as at December 31, 2015 with results available in Employers participating in the Plan record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plan records accrued liabilities and accrued assets for the Plan in aggregate with the result that there is no consistent and reliable basis for allocating the obligation, plan assets and cost to individual employers participating in the Plan. The School District No. 47 (Powell River) paid $1,931,546 for employer contributions to these plans for the year ended June 30, 2014 and $1,883,425 for the year ended June 30,

23 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 12 ACCUMULATED SURPLUS Internally Restricted (appropriated) by Board for: Recast-Note8 School & Program Based Resources : Technology Initiatives Curriculum Implementation Special Services Support Learning Resources Student Achievement Initiatives Eco & Sustainability Initiatives First Nations Support $23,000 20, ,500 60,000 9,615 20,000 $ 0 0 8,317 17,564 92,457 3,587 26,509 Subtotal Internally Restricted Operating Surplus 146, ,434 Unrestricted Operating Surplus Special Purpose Fund Surplus Capital Fund Surplus 476, ,837, , ,721,845 Total Available for Future Operations $10,459,417 $10,256,235 NOTE 13 INTERFUND TRANSFERS Interfund transfers between the operating, special purpose and capital funds are reported on Schedule 1 (Statement of Changes in Accumulated Surplus (Deficit) by Fund. For the year ended June 30, 2014 there were no such transfers. NOTE 14 RELATED PARTY TRANSACTIONS The School District is related through common ownership to all Province of British Columbia ministries, agencies, school districts, health authorities, colleges, universities, and crown corporations. Transactions with these entities, unless disclosed separately, are generally considered to be in the normal course of operations and are recorded at the exchange amount. 21

24 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 15 BUDGET FIGURES Budget figures included in the financial statements were approved by the Board through the adoption of an amended annual budget on February 18, The Board adopted a preliminary annual budget on June 18, The amended budget is used for comparison purposes, as these are based on actual student enrollments. The difference between the two budgets is as follows: Amended Preliminary Difference Revenues Provincial Grants Ministry of Education 21,995,990 22,101,343 (105,353) Other 70, ,000 Fed Grant 277, ,080 Tuition 310, ,000 62,000 Other Revenue 3,141,277 2,365, ,697 Rentals and Leases 48,000 45,000 3,000 Investment Income 36,000 42,500 (6,500) Amortization of Deferred Capital Revenue 859, ,341 0 Total Revenue 26,737,688 25,661,764 1,075,924 Expenses Instruction 21,519,607 20,125,768 1,393,839 District Administration 1,028,485 1,019,931 8,554 Operations and Maintenance 4,014,026 4,066,512 (52,486) Transportation and Housing 750, ,001 4,999 Interest Total Expenses 27,312,118 25,957,212 1,354,906 Deficit for the year (574,430) (295,448) (278,982) Effects of change in Tangible Capital Assets Acquisition of Tangible Capital Assets (600,000) (600,000) Amortization of Tangible Capital Assets 1,041,596 1,041,596 0 Total Effect of change in Tangible Capital Assets 441,596 1,041,596 (878,982) (Increase) Decrease in Net Financial Assets (Debt) (132,834) 746,148 (878,982) 22

25 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 16 CONTINGENCIES a) Ongoing Legal Proceedings In the ordinary course of operations, the School District has legal proceedings brought against it and provision has been included in liabilities where appropriate. It is the opinion of management that final determination of these claims will not have a material effect on the financial position or operations of the School District. b) Class Action Lawsuit In 2011, the School District was served a writ of summons in a class action lawsuit involving 25 other school districts throughout the Province, seeking recovery of tuition fees paid for summer school courses in prior fiscal periods. This lawsuit has now been settled with no financial impact on the School District. NOTE 17 ECONOMIC DEPENDENCE Operations of the School District are dependent on continued funding from the Ministry of Education and various governmental agencies to carry out its programs. These financial statements have been prepared under the assumption that the School District operates as a going concern. NOTE 18 FINANCIAL INSTRUMENTS All significant financial assets, financial liabilities and equity instruments of the School District are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Credit Risk Financial instruments that potentially subject the School District to concentrations of credit risk consist primarily of other receivables. The maximum credit risk exposure is $715,740 ( $1,532,013). However, the School District believes that there is minimal risk associated with the collection of these amounts as they consist primarily of receivables from the Federal and Provincial Government organizations. The School District manages its credit risk by performing regular credit assessments of its customers and provides allowances for potentially uncollectible accounts receivable. Liquidity Risk Liquidity risk is the risk that the School District will encounter difficulty in meeting obligations associated with financial liabilities. 23

26 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 18 FINANCIAL INSTRUMENTS (Continued) Liquidity Risk (continued) The School District manages liquidity risk by continually monitoring actual and forecasted cash flows from operations and anticipated investing activities to ensure, as far as possible to always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the School District s reputation. Foreign Currency Risk Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. In seeking to manage the risks from foreign exchange rate fluctuations, the School District does not hold significant funds in U.S. dollars in order to reduce their risk against adverse movements in the foreign exchange rates. Financial Asset Impairment At each year-end date, the School District is required to evaluate and record any other-than-temporary impairment of its financial assets, other than those classified as held for trading. Accordingly, the School District has compared the carrying value of each of these financial assets to its fair value as at June 30, No provision for impairment was recorded in the current year, as the fair value of all financial assets tested exceeded their carrying value. Fair Values of Financial Instruments The carrying amount of cash, accounts receivable and accounts payable and accrued liabilities approximates their fair value due to the short-term maturities of these items. Risk Management Policy The School District, as part of its operations, has established objectives (i.e. hedging of risk exposures and avoidance of undue concentrations of risk) to mitigate credit risk as risk management objectives. In seeking to meet these objectives, the School District follows a risk management policy approved by its Board of Trustees. 24

27 POWELL RIVER BOARD OF EDUCATION SCHOOL DISTRICT NO. 47 FINANCIAL STATEMENT NOTES YEAR ENDED JUNE 30, 2014 NOTE 19 ASSET RETIREMENT OBLIGATION The District is subject to environmental laws and regulations enacted by the Province and local authorities. The District currently provides educational programs in 7 schools. It also operates a number of administrative support buildings. Many of these schools and buildings were constructed prior to the implementation of current asbestos removal regulations and asbestos containing materials were utilized in their construction. The nature and extent of asbestos construction material varies from building to building. Upon retirement of these District buildings, either through demolition or sale, the District may incur removal costs or realize reduced sale proceeds because of the presence of asbestos. The District has made no provision for the financial impact of removal costs or reduced sale proceeds as they cannot be reasonably estimated due to the indeterminate nature and date of potential future retirements. NOTE 20 EXPENSE BY OBJECT Recast-Note 8 Salaries $ 15,071,885 $ 15,954,095 Benefits 3,515,128 3,582,335 Service and supplies 7,392,617 7,157,109 Amortization 1,186,540 1,041,196 $ 27,166,170 $ 27,734,735 NOTE 21 COMPARATIVE FIGURES Certain comparative figures have been restated to conform to the current year s presentation. 25

28 School District No. 47 (Powell River) Schedule of Changes in Accumulated Surplus (Deficit) by Fund Year Ended June 30, 2014 Operating Special Purpose Capital Fund Fund Fund Actual Actual Schedule 1 (Unaudited) (Recast - Note 8) $ $ $ $ $ Accumulated Surplus (Deficit), beginning of year 518,407 9,737,828 10,256,235 10,503,023 Prior Period Adjustments (14,592) Accumulated Surplus (Deficit), beginning of year, as restated 518,407-9,737,828 10,256,235 10,488,431 Changes for the year Surplus (Deficit) for the year 103,890 99, ,182 (232,196) Net Changes for the year 103,890-99, ,182 (232,196) Accumulated Surplus (Deficit), end of year - Statement 2 622,297-9,837,120 10,459,417 10,256,235 Version: October 01, :30 Page 26

29 School District No. 47 (Powell River) Schedule of Operating Operations Year Ended June 30, Budget Actual Actual Schedule 2 (Unaudited) (Recast - Note 8) $ $ $ Revenues Provincial Grants Ministry of Education 19,991,453 20,017,915 20,589,187 Other 70,000 90, ,128 Tuition 310, , ,059 Other Revenue 1,463,777 1,218,845 1,553,639 Rentals and Leases 48,000 74,396 57,850 Investment Income 30,000 46,945 42,771 Total Revenue 21,913,230 21,900,886 22,636,634 Expenses Instruction 17,659,183 17,135,015 18,043,698 District Administration 965, , ,415 Operations and Maintenance 2,936,352 3,087,248 2,966,874 Transportation and Housing 750, , ,302 Total Expense 22,311,405 21,796,996 22,607,289 Operating Surplus (Deficit) for the year (398,175) 103,890 29,345 Budgeted Appropriation (Retirement) of Surplus (Deficit) 398,175 Net Transfers (to) from other funds Local Capital (236,952) Total Net Transfers - - (236,952) Total Operating Surplus (Deficit), for the year - 103,890 (207,607) Operating Surplus (Deficit), beginning of year 518, ,606 Prior Period Adjustments April - June 2012 EFB Expense Restatement (14,592) Operating Surplus (Deficit), beginning of year, as restated 518, ,014 Operating Surplus (Deficit), end of year 622, ,407 Operating Surplus (Deficit), end of year Internally Restricted (Note 12) 146, ,434 Unrestricted 476, ,973 Total Operating Surplus (Deficit), end of year 622, ,407 Version: October 01, :30 Page 27

30 School District No. 47 (Powell River) Schedule of Operating Revenue by Source Year Ended June 30, Budget Actual Actual Schedule 2A (Unaudited) (Recast - Note 8) $ $ $ Provincial Grants - Ministry of Education Operating Grant, Ministry of Education 20,867,452 20,663,031 21,365,444 AANDC/LEA Recovery (1,141,302) (932,928) (1,082,545) Other Ministry of Education Grants Pay Equity 243, , ,304 FSA Exam Allocation 7,000 7,972 7,972 Carbon Tax Reimbursement 32,499 30,232 Education Guarantee 15,000 3,324 24,780 Linking Trades (meeting) 713 Total Provincial Grants - Ministry of Education 19,991,453 20,017,915 20,589,187 Provincial Grants - Other 70,000 90, ,128 Tuition Offshore Tuition Fees 310, , ,059 Total Tuition 310, , ,059 Other Revenues Other School District/Education Authorities 122, , ,328 LEA/Direct Funding from First Nations 1,141, ,928 1,082,545 Miscellaneous BMO 12,532 14,024 Misc. Billings & Recoveries 200,000 76, ,790 Reimbursement for Renovation & Equipment 236,952 Used Vehicle & Equipment Sales 21,100 Service Contract 46,600 Art Starts Grant 6,311 Total Other Revenue 1,463,777 1,218,845 1,553,639 Rentals and Leases 48,000 74,396 57,850 Investment Income 30,000 46,945 42,771 Total Operating Revenue 21,913,230 21,900,886 22,636,634 Version: October 01, :30 Page 28

31 School District No. 47 (Powell River) Schedule of Operating Expense by Object Year Ended June 30, Budget Actual Actual Schedule 2B (Unaudited) (Recast - Note 8) $ $ $ Salaries Teachers 8,193,890 7,804,579 8,528,534 Principals and Vice Principals 1,035,000 1,030,986 1,045,837 Educational Assistants 1,745,925 1,654,310 1,548,247 Support Staff 1,753,461 1,753,594 1,775,836 Other Professionals 1,177,832 1,169,155 1,188,251 Substitutes 695, , ,641 Total Salaries 14,601,554 14,125,866 14,905,346 Employee Benefits 3,220,739 3,346,248 3,421,206 Total Salaries and Benefits 17,822,293 17,472,114 18,326,552 Services and Supplies Services 1,569,039 1,422,492 1,290,830 Student Transportation 20,500 24,467 23,350 Professional Development and Travel 262, , ,598 Rentals and Leases 201, , ,112 Dues and Fees 124, , ,320 Insurance 90,000 81,807 86,979 Supplies 1,545,010 1,426,874 1,584,112 Utilities 676, , ,436 Total Services and Supplies 4,489,112 4,324,882 4,280,737 Total Operating Expense 22,311,405 21,796,996 22,607,289 Version: October 01, :30 Page 29

32 School District No. 47 (Powell River) Operating Expense by Function, Program and Object Schedule 2C (Unaudited) Year Ended June 30, 2014 Principals and Educational Support Other Teachers Vice Principals Assistants Staff Professionals Substitutes Total Salaries Salaries Salaries Salaries Salaries Salaries Salaries $ $ $ $ $ $ $ 1 Instruction 1.02 Regular Instruction 6,508, ,154 49,065 63, , ,632 7,438, Career Programs 81,393 81, Library Services 42,831 19,964 9,944 72, Counselling 249,080 19,863 17, , Special Education 663,391 64,031 1,550,879 10, , ,961 2,674, English Language Learning 54,366 54, Aboriginal Education 192,847 29,000 9, , School Administration 745, ,468 39,878 28,412 1,106, Summer School 7,970 7, Off Shore Students 66, ,192 Total Function 1 7,804,579 1,008,885 1,654, , , ,904 12,019,989 4 District Administration 4.11 Educational Administration 22, , , School District Governance 60,692 60, Business Administration 109, , ,813 Total Function 4-22, , , ,357 5 Operations and Maintenance 5.41 Operations and Maintenance Administration 20,450 62,168 82, Maintenance Operations 842, ,434 66,673 1,038, Maintenance of Grounds 38,116 38, Utilities - Total Function , ,602 66,673 1,159,282 7 Transportation and Housing 7.41 Transportation and Housing Administration 7,331 33,871 41, Student Transportation 341,371 31, ,036 Total Function ,702 33,871 31, ,238 9 Debt Services Total Function Total Functions 1-9 7,804,579 1,030,986 1,654,310 1,753,594 1,169, ,242 14,125,866 Version: October 01, :30 Page 30