The Norfolk Hospital Nursing Home. Financial Statements March 31, 2014

Transcription

1 Financial Statements March 31, 2014

2 Index to Financial Statements March 31, 2014 INDEPENDENT AUDITORS' REPORT 1 Page FINANCIAL STATEMENTS Statement of Financial Position 2 Statement of Changes in Net Assets 3 Statement of Operations 4 Statement of Cash Flow 5 Notes to Financial Statements 6-9

3 INDEPENDENT AUDITORS' REPORT To the Members of The Norfolk Hospital Nursing Home We have audited the accompanying financial statements of The Norfolk Hospital Nursing Home, which comprise the statement of financial position as at March 31, 2014 and the statements of operations, changes in net assets and cash flow for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian Public Sector Accounting Standards for Government 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 is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Norfolk Hospital Nursing Home as at March 31, 2014 and the results of its operations and its cash flow for the year then ended in accordance with Canadian Public Sector Accounting Standards for Government Not-For-Profit Organizations. May 27, 2014 Simcoe, Ontario Chartered Accountants Licensed Public Accountants 1

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5 Statement of Changes in Net Assets Net assets - beginning of year $ 705,843 $ 697,631 Excess (deficiency) of revenue over expenses 107,138 8,212 NET ASSETS - END OF YEAR $ 812,981 $ 705,843 See accompanying notes 3

6 Statement of Operations REVENUE Ministry of Health Nursing and personal care $ 2,927,921 $ 2,850,889 Program and support 349, ,347 Food 230, ,521 Accommodation 114, ,158 Structural compliance, accreditation and one-time grants 58,757 53,826 3,681,407 3,574,741 Other revenue Resident co-payment 1,480,924 1,456,131 Recoveries and sundry revenue 12,736 15,806 Interest income 9,397 7,286 Amortized capital grant revenue 21,430 20,809 1,524,487 1,500,032 Total revenue 5,205,894 5,074,773 Expenses Nursing and personal care Salaries, wages and benefits 2,965,168 2,902,538 Supplies and other expenses 95, ,777 3,060,382 3,010,315 Program and support Salaries, wages and benefits 197, ,058 Supplies and other expenses 60,687 77, , ,002 Food 248, ,235 Accommodation (Note 10) 1,326,357 1,308,927 1,574,457 1,552,162 Financial Interest 47,746 50,140 Amortization of property and equipment 157, , , ,082 Total expenses 5,098,756 5,066,561 EXCESS OF REVENUE OVER EXPENSES $ 107,138 $ 8,212 See accompanying notes 4

7 Statement of Cash Flow OPERATING ACTIVITIES Excess of revenue over expenses for the year $ 107,138 $ 8,212 Items not affecting cash: Increase in employee future benefits 4,700 4,100 Amortization of property and equipment 157, ,942 Amortization of deferred capital grants (21,430) (20,809) 247, ,445 Changes in non-cash working capital: Accounts receivable 21,843 (10,455) Prepaid expenses 95 (181) Accounts payable (16,111) 60,196 Deferred income - 10,400 Goods and services tax payable (recoverable) 3,706 (412) Due to Norfolk General Hospital 18,834 (133,425) 28,367 (73,877) Cash flow from operating activities 276, ,568 CAPITAL ACTIVITY Purchase of equipment (65,938) (139,057) FINANCING ACTIVITIES Repayment of mortgage payable (31,525) (29,147) Receipt of capital donations and grants 67,273 43,390 Cash flow from financing activities 35,748 14,243 INCREASE IN CASH 246,152 7,754 Cash - beginning of year 854, ,959 CASH - END OF YEAR $ 1,100,865 $ 854,713 See accompanying notes 5

8 Notes to Financial Statements 1. PURPOSE OF ORGANIZATION The Norfolk Hospital Nursing Home is incorporated without share capital under the Corporations Act (Ontario) and provides health care and accommodation to residents of Norfolk County and the surrounding communities. The Nursing Home is exempt from income taxes under the Income Tax Act. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared by management in accordance with Canadian public sector accounting standards for government not-for-profit organizations, including the 4200 series of standards, as issued by the Public Sector Accounting Board. Revenue recognition The Nursing Home follows the deferral method of accounting for contributions which include donations and government grants. Under the Health Insurance Act and Regulations thereto, the Nursing Home is funded primarily by the Province of Ontario in accordance with budget arrangements established by the Ministry of Health and Long Term Care. 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. These financial statements reflect agreed arrangements approved by the Ministry with respect to the year ended March 31, 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. Revenue from the residents' co-insurance, preferred accommodation, and marketed services is recognized when the service is provided. Externally restricted contributions are recognized as revenue in the year in which the related expenses are recognized. Contributions restricted for the purchase of property 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 and equipment. Property and equipment Property and equipment are stated at cost less accumulated amortization. Property and equipment are amortized over their estimated useful lives at the following rates and methods: Buildings 10 to 40 years straight-line method Equipment 3 to 10 years straight-line method (continues) 6

9 Notes to Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Employee future benefits The Nursing Home offers extended health, dental and life insurance benefits to certain employee groups upon early retirement. The cost of these retirement benefits are actuarially determined using management's best estimate of health care costs, disability recovery rates and discount rates. Adjustments to these costs arising from changes in estimates and experience gains and losses are amortized to income over the estimated average remaining service life of the employee groups on a straight line basis. Measurement uncertainty The preparation of financial statements in conformity with Canadian Public Sector Accounting Standards for Not-for-Profit Organizations requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. In determining estimates of accrued liabilities, the Nursing Home relies on assumptions regarding applicable industry performance and prospects, as well as general business and economic conditions that prevail and are expected to prevail. Actual results could differ from those estimates. Contributed services and materials Volunteers contribute numerous hours to assist the Nursing Home in carrying out certain aspects of its service delivery activities. The fair value of these contributed services is not readily determinable and, as such, is not reflected in these financial statements. Contributed materials are also not recognized in these financial statements. 3. PROPERTY AND EQUIPMENT Cost Accumulated Net book Net book amortization value value Land $ 52,800 $ - $ 52,800 $ 52,800 Buildings 2,683,611 2,179, , ,073 Equipment 1,187,227 1,030, , ,233 $ 3,923,638 $ 3,210,160 $ 713,478 $ 805, TRUST FUND The trust fund is comprised of residents' personal money to provide convenience for those residents who need to have funds maintained in a safe place and readily available for use in the nursing home. Money in the trust fund may be used to pay for facility-related transactions approved by the resident or an authorized representative. 7

10 5. DUE TO NORFOLK GENERAL HOSPITAL The Norfolk Hospital Nursing Home Notes to Financial Statements The Norfolk Hospital Nursing Home purchases items such as meals, utilities, housekeeping and administrative services from Norfolk General Hospital at fair market value under normal trade terms. The total of these purchased services for the year amounted to $1,182,816 ( $1,191,989). In addition, the Hospital makes all payments associated with the Nursing Home's capital and operating costs excluding net payroll costs, and then recovers all of these payments from the Nursing Home. As at March 31, 2014 the Nursing Home owes the Hospital $111,739 ( $92,905). 6. MORTGAGE PAYABLE Canada Mortgage and Housing Corporation mortgage bearing interest at 8% per annum, repayable in monthly blended payments of $6,623. The loan matures on June 1, 2025 and is secured by land and building. $ 592,048 $ 623,573 Amount payable within one year (34,098) (31,525) $ 557,950 $ 592,048 Principal repayment terms are approximately: 2015 $ 34, , , , ,035 $ 592, DEFERRED CAPITAL GRANTS AND DONATIONS Deferred capital grants and donations represent the unamortized capital contributions received for the purchase of equipment. The amortization of capital contributions is recorded as revenue in the statement of operations. The changes in the deferred contributions balance for the period are as follows: Balance - beginning of year $ 126,297 $ 103,716 Contributions during the year 67,273 43,390 Amortization for the year (21,430) (20,809) $ 172,140 $ 126,297 8

11 8. EMPLOYEE FUTURE BENEFITS The Norfolk Hospital Nursing Home Notes to Financial Statements The Nursing Home provides extended health, dental and life insurance benefits to certain employee groups upon early retirement. The Nursing Home recognizes these benefits as they are earned during the employee's tenure of service. The accrued benefit liability is determined by an independent actuary, the actuarial valuation was performed April 2014 and includes the value of the liability as at March 31, 2014 and March 31, EXTERNALLY RESTRICTED NET ASSETS Canada Mortgage and Housing Corporation (C.M.H.C.) contributed $151,520 to The Norfolk Hospital Nursing Home. This amount is forgivable upon the Nursing Home building being used as a nursing home until the due date of the C.M.H.C. mortgage of June 1, ACCOMMODATION EXPENSES Accommodation expenses are comprised of the following: Nutrition and food services $ 381,992 $ 401,234 Plant operations and utilities 334, ,102 Housekeeping 234, ,454 Laundry 141, ,251 General office and administration 82,371 71,704 Salaries, wages and benefits 92,496 88,194 Finance and payroll services 58,988 58,988 $ 1,326,357 $ 1,308, PENSION BENEFITS Substantially all of the employees of the Nursing Home are eligible to be members of the Hospitals of Ontario Pension Plan (H.O.O.P.P.) which is a multi-employer average pay contributory pension plan. Employer contributions made to the plan during the year amounted to $167,964 ( $169,044). These amounts are included in staff benefits expense on the statement of operations. 12. FINANCIAL INSTRUMENTS Financial instruments consist of cash, accounts receivable, trust funds, amounts due to Norfolk General Hospital, accounts payable and mortgage payable. Excluding the mortgage payable, these financial instruments are all short term in nature and as such, their carrying value approximates fair value. The mortgage payable is at a prevailing market interest rate and as such, its carrying value approximates fair value. 13. COMPARATIVE FIGURES Some of the comparative figures have been reclassified to conform to the current year's presentation. 9