Canadian Mental Health Association, Middlesex. Financial Statements March 31, 2017

Transcription

1 Canadian Mental Health Association, Middlesex Financial Statements March 31,

2 September 29, Independent Auditor s Report To the Board of Trustees of Canadian Mental Health Association, Middlesex We have audited the accompanying financial statements of Canadian Mental Health Association, Middlesex, which comprise the statement of financial position as at March 31, and the statements of operations, changes in net assets and cash flows for the year then ended, and the related notes, which comprise 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 entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP 465 Richmond Street, Suite 400, London, Ontario, Canada N6A 5P4 T: , F: PwC PwC refers refers to to PricewaterhouseCoopers PricewaterhouseCoopers LLP, LLP, an an Ontario Ontario limited limited liability liability partnership. partnership.

3 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Canadian Mental Health Association, Middlesex as at March 31, 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 Professional Accountants, Licensed Public Accountants

4 Statement of Financial Position As at March 31, Assets Operating Replacement Reserve Donation Current assets Cash and short-term investments (note 3) 273, , , ,106 2,015,295 Accounts receivable 776, , ,333 Prepaid expenses and deposits 274, , ,744 1,324, , ,477 1,779,402 2,823,372 Investments (note 4) - 724, , ,062 Property, buildings and equipment (note 5) 5,921, ,921,154 6,319,159 Liabilities 7,245,628 1,030, ,477 8,425,461 9,760,593 Current liabilities Accounts payable and accrued liabilities 601, , ,704 Accrued salaries and benefits (note 12) 1,000, ,000,376 1,527,874 Interfund balances (78,964) (57,963) 136, Current portion of long-term debt (note 6) 1,068,872 1,068,872 1,465,833 2,591,331 (57,963) 136,927 2,670,295 3,349,411 Long-term debt (note 6) 1,509, ,509,693 1,327,361 Deferred contributions Expenses of future periods (note 7) 277,174 1,088,319 12,550 1,378,043 1,478,102 Property, buildings and equipment (note 7) 2,126, ,126,195 2,368,881 6,504,393 1,030, ,477 7,684,226 8,523,755 Net assets Investment in property, building and equipment (note 8) 1,216, ,216,394 1,157,084 Unrestricted (note 9) (475,159) - - (475,159) 79, , ,235 1,236,838 Commitments (note 10) 7,245,628 1,030, ,477 8,425,461 9,760,593 On behalf of the Board Trustee Trustee The accompanying notes are an integral part of these financial statements.

5 Statement of Operations For the year ended March 31, Operating Replacement Reserve Donation Year ended March 31, Year ended March 31, Revenue Grants Ministry of Health 16,892, ,892,892 15,824,756 London & Middlesex Housing Corporation 51, ,059 46,830 London Health Sciences Centre 665, , ,900 United Way 478, , ,000 Other 91, ,260 91,592 Rental revenue 1,291, ,291,115 1,389,616 Other revenue 742, , ,437 Amortization of deferred contributions related to property, buildings and equipment (note 7) 323, , ,361 Amortization of deferred contributions related to expenses of future periods (note 7) 109,348 99, , , ,935 20,645,598 99, ,075 21,434,147 20,717,427 Operating and administration expenses Salaries 12,536, ,536,326 11,964,147 Employee benefits 2,941, ,941,033 2,780,124 Consulting and recruitment 308, , ,933 raising 40, ,674 31,535 Sessional fees 232, ,495 91,592 Office supplies and interest expense 235, , ,884 Telephone 229, , ,707 Professional fees 49, ,509 42,335 Conference and workshops 121, ,547 98,563 Advertising and promotion 39, ,293 14,888 Program expense and supplies 153, , , ,630 Meals and meetings 67, ,303 39,312 Travel 245, , ,975 Computer maintenance and supplies 121, , ,807 Rent and security 1,977, ,977,232 1,978,316 Insurance and municipal taxes 225, , ,251 Repairs and maintenance 508,080 99, , ,080 Heat and hydro 372, , ,967 Mortgage interest 60, ,828 76,264 Amortization of property, buildings and equipment 510, , ,810 Settlements of prior period funding 164, ,129-21,141,201 99, ,075 21,929,750 20,759,120 Excess of expenses over revenues (495,603) - - (495,603) (41,693) The accompanying notes are an integral part of these financial statements.

6 Statements of Changes in Net Assets For the year ended March 31, Operating Replacement Reserve Donation Year ended March 31, Year ended March 31, Balance - Beginning of year 1,236, ,236,838 1,832,429 Excess of expenses over revenues (495,603) - - (495,603) (41,693) Adjustment for settlements of prior period funding (note 9) (553,898) Balance - End of year (note 9) 741, ,235 1,236,838 The accompanying notes are an integral part of these financial statements.

7 Statement of Cash Flows For the year ended March 31, Operating Replacement Reserve Donation Year ended March 31, Year ended March 31, Operating activities Excess of expenses over revenues (495,603) - - (495,603) (41,693) Add (deduct) items not affecting cash Amortization of property, buildings and equipment 510, , ,810 Amortization of deferred contributions related to property, buildings and equipment (323,500) - - (323,500) (396,361) Amortization of deferred contributions related to expenses of future periods (109,348) (99,474) (689,075) (897,897) (871,935) (417,908) (99,474) (689,075) (1,206,457) (737,179) Changes in non-cash working capital balances Accounts receivable (249,074) - - (249,074) 631,073 Prepaid expenses and deposits 5, ,855 (120,946) Accounts payable and accrued liabilities 245, ,343 (67,077) Accrued salaries and benefits (527,498) - - (527,498) 66,247 Interfund balance 9,926 (57,963) 48, Cash used in operating activities (933,356) (157,437) (641,038) (1,731,831) (227,882) Investing activities Net (increase) decrease in investments - (106,843) - (106,843) 80,199 Purchase of property, buildings and equipment (112,538) - - (112,538) (82,600) Cash used in investing activities (112,538) (106,843) - (219,381) (2,401) Financing activities Repayment of bank indebtedness (5,000) Adjustment for settlements of prior period funding (note 9) (553,898) Deferred contributions for property, buildings and equipment (note 7) 80, ,814 77,255 Deferred contributions for expenses of future periods (note 7) 123, , , ,838 1,051,327 Repayment of long-term debt (214,629) - (214,629) (204,187) Cash provided by financing activities (10,792) 101, , , ,497 (Decrease) increase in cash and short-term investments (1,056,686) (162,316) (68,187) (1,287,189) 135,214 Cash and short-term investments - Beginning of year (note 3) 1,329, , ,664 2,015,295 1,880,081 Cash and short-term investments - End of year (note 3) 273, , , ,106 2,015,295 The accompanying notes are an integral part of these financial statements.

8 Notes to Financial Statements March 31, 1 Purpose of Canadian Mental Health Association, Middlesex The mission statement of Canadian Mental Health Association, Middlesex (the Organization) is as follows, We promote mental wellness through responsive and innovative services and empower individuals on their recovery journey. The Organization is a registered charity and is classified as a charitable organization under the Income Tax Act. 2 Summary of significant accounting policies Basis of presentation These financial statements have been prepared in accordance with accounting standards for not-for-profit organizations (ASNPO) within the framework of the accounting policies summarized below. accounting All financial transactions have been recorded in three funds: Operating, Replacement Reserve, and Donation. The Operating reflects housing, therapeutic, and administrative activities of the Organization. ing is provided by the Province of Ontario. Any excess of funds from operations related to Ministry of Health programs may be deducted from the approved budget for subsequent years. Additional funding is provided by the Ministry of Health-Supportive Housing through an interest reduction program on some of the Organization s long-term debt. The Replacement Reserve is used for major maintenance of owned rental properties. The Donation is funded by donations and interest, and used to finance clients activities. Revenue recognition The Organization follows the deferral method of accounting for contributions which include donations and government grants. Operating grants are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in the subsequent period. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Externally restricted contributions are recognized as revenue in the period in which the related expenses are recognized. Contributions restricted for the purchase of property, building, and equipment are deferred and amortized into revenue on a straight-line basis, at a rate corresponding with the amortization rate for the related property, buildings and equipment. (1)

9 Notes to Financial Statements March 31, Rental revenue is recognized when services are provided. Property, plant and equipment Purchased property, buildings and equipment are recorded at cost. Contributed property, buildings and equipment are recorded at fair value at the date of contribution. Repairs and maintenance costs are charged to expense. Betterments, which extend the estimated life of an asset, are capitalized. When a capital asset no longer contributes to the Organization s ability to provide services, its carrying amount is written down to its residual value. Property, buildings and equipment are amortized on a straight-line basis using the following annual rates: Buildings Equipment Vehicles Software Leasehold improvements 35 years 5 years 7 years 2 years 5 years Certain restrictions and guidelines exist with respect to land and buildings subsidized by Canada Mortgage and Housing Corporation and the Ontario Ministry of Health. Compensated absences Compensation expense is accrued for all employees as entitlements to these payments are earned, in accordance with the Organization s benefit plans for vacation. Use of estimates The preparation of financial statements in conformity with ASNPO requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Financial instruments All financial instruments are initially recorded on the statement of financial position at fair value. They are subsequently valued at amortized cost, except for investments in equity instruments which are measured at cost less any reduction for impairment or fair value if they are quoted in an active market. It is management s opinion that the Organization is not exposed to significant market risk, foreign currency risk, credit risk or interest rate risk as a result of these financial instruments. (2)

10 Notes to Financial Statements March 31, 3 Cash and short-term investments Operating Replacement Reserve Donation Cash and cash equivalents 273,178 46, , ,555 1,453,542 Short-term investments - 258, , ,753 4 Investments 273, , , ,106 2,015,295 Investments consist of guaranteed investment certificates (GICs) with stated interest ranging from 2.22% to 2.70% and maturity dates greater than one year. The GICs mature between April and May The carrying value of the investments includes 14,974 ( - 13,590) of accrued interest receivable. 5 Property, buildings and equipment Cost Accumulated amortization Net Land 1,786,829-1,786,829 Buildings 7,381,175 3,711,129 3,670,046 Leaseholds 2,953,565 2,638, ,723 Equipment 1,644,819 1,584,383 60,436 Vehicles 420, ,176 45,832 Computer hardware 1,485,011 1,441,723 43,288 15,671,407 9,750,253 5,921,154 Cost Accumulated amortization Net Land 1,786,829-1,786,829 Buildings 7,349,452 3,528,084 3,821,368 Leaseholds 2,953,565 2,408, ,188 Equipment 1,601,840 1,567,404 34,436 Vehicles 420, ,823 70,185 Computer hardware 1,447,176 1,386,023 61,153 15,558,870 9,239,711 6,319,159 (3)

11 Notes to Financial Statements March 31, 6 Long-term debt Exeter North Housing Program: 1.040% mortgage, payable in monthly instalments of principal and interest of 742, due October ,661 77, % mortgage, payable in monthly instalments of principal and interest of 866, due June ,303 96,835 Exeter North Housing III Program: 5.912% mortgage, payable in monthly instalments of principal and interest of 1,994, due January , ,621 Piccadilly Street Housing Program: 9.625% mortgage, payable in monthly instalments of principal and interest of 391, due January, The Organization is presently receiving a federal interest reduction grant which reduces the effective mortgage interest rate to 7.900%. The balance payable reflects a contribution from the mortgagor which reduces the mortgage by 9,697. If the Organization disposes of the property without the approval of the mortgagor, it may be required to repay a portion of the amount by which the mortgage principal and interest have been reduced. 31,679 33,292 Other Group Housing Program: 1.110% mortgage, payable in monthly instalments of principal and interest of 495, due January ,274 27,909 The Organization was receiving an interest reduction grant for the above mortgage from the Ministry of Health-Supportive Housing in which reduced the effective mortgage interest rate. The mortgage was renewed in and no interest reduction grant has been received. Project 3000 Housing Program: 1.855% mortgage, payable in monthly instalments of principal and interest of 2,834, due June , , % mortgage, payable in monthly instalments of principal and interest of 1,131 due January ,310 86, % mortgage, payable in monthly instalments of principal and interest of 1,640 due April , ,842 (4)

12 Notes to Financial Statements March 31, Permanent Housing Program: 1.820% mortgage, payable in monthly instalments of principal and interest of 1,674, due September , , % mortgage, payable in monthly instalments of principal and interest of 1,721, due October , , % mortgage, payable in monthly instalments of principal and interest of 1,474, due May , , % mortgage, payable in monthly instalments of principal and interest of 2,103, due February , , % mortgage, payable in monthly instalments of principal and interest of 1,970, due April , , Talbot Street: 2.880% mortgage, payable in monthly instalments of principal and interest of 3,877 due February , ,605 2,578,565 2,793,194 Less: Current portion (1,068,872) (1,465,833) 1,509,693 1,327,361 Future principal payments are as follows: ,068, , , , ,578,565 (5)

13 Notes to Financial Statements March 31, 7 Deferred contributions a) Expenses of future periods Deferred contributions related to expenses of future periods represent unspent externally restricted grants and donations. Balance - Beginning of period 1,478,102 1,298,710 Less: Amount recognized as revenue during the period (897,897) (871,935) Add: Amount received related to the following period 797,838 1,051,327 b) Property, buildings and equipment 1,378,043 1,478,102 Deferred capital contributions related to property, buildings and equipment represent the unamortized amount and unspent amount of donations and grants received for the purchase of property, buildings and equipment. The amortization of capital contributions is recorded as revenue in the statement of operations. Balance - Beginning of period 2,368,881 2,687,987 Less: Amount recognized as revenue during the period (323,500) (396,361) Add: Amount received relating to the following period 80,814 77,255 Balance - End of period 2,126,195 2,368,881 8 Investment in property, buildings and equipment Investment in property, buildings and equipment is calculated as follows: Property, buildings and equipment 5,921,154 6,319,159 Amounts financed by: Current portion of long-term debt (1,068,872) (1,465,833) Long-term debt (1,509,693) (1,327,361) Deferred contributions (2,126,195) (2,368,881) 1,216,394 1,157,084 (6)

14 Notes to Financial Statements March 31, 9 Adjustment for settlements of prior period funding During the year ended March 31,, the Ministry of Health advised that the Organization had received an excess of funding of 164,129 for the fiscal years The statement of operations included the net settlement of 164,129 in this funding period. The statements for the year ended March 31, and other prior periods are subject to review by the Ministry of Health and consequently, a portion of the unrestricted net assets of the Organization may be refundable to the Ministry of Health. 10 Commitments The Organization is committed under operating leases to rent premises and certain of its office equipment. The leases may be cancelled in the event that funding for the program is unavailable. The combined future lease payments are approximately as follows: , , , , Pension plan The majority of full-time employees of the Organization are members of the Healthcare of Ontario Pension Plan. This plan is a multi-employer, defined benefit pension plan. Plan members will receive benefits based on the length of service and on the average of annualized earnings during the five consecutive years prior to retirement, termination or death, which provide the highest earnings. Employer contributions made to the plan during the year amounted to 959,950 ( - 897,378). The most recent actuarial valuation of the plan at December 31, indicates it was 122% funded compared to 122% funded at December 31, A group of employees are members of The Pension Plan for Employees of the Canadian Mental Health Association provided by SunLife Assurance Company of Canada. This is a defined contribution pension plan. Employer contributions to the plan during the period amounted to 3,123 ( - 4,924). (7)

15 Notes to Financial Statements March 31, 12 Government remittances Included in accrued salaries and benefits are statutory remittances due as follows: EHT 28,065 19,487 EI 23, CPP 55,842 1,206 Total government remittances 107,051 21,207 None of these remittances are in arrears. 13 Comparative financial information Certain prior period financial information has been amended to conform to current year presentation. (8)

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