Meals on Wheels, Bermuda. Financial Statements

Transcription

1 Financial Statements March 31, 2014

2 INDEPENDENT AUDITOR S REPORT To the Members of Meals on Wheels, Bermuda We have audited the accompanying financial statements of Meals on Wheels, Bermuda, which comprise the statement of financial position as at March 31, 2014 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 accounting standards for not-for-profit organizations generally accepted in Bermuda and Canada, 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 auditing standards generally accepted in Bermuda and Canada. 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 presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

3 Basis for qualified opinion In common with many charitable organizations, Meals on Wheels, Bermuda derives revenue from donations and other transactions with the public, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of Meals on Wheels, Bermuda and we were not able to determine whether any adjustments might be necessary to revenues, surplus of revenues over expenses, assets and net assets. Qualified opinion In our opinion, except for the possible effects of the matter described in the basis for qualified opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Meals on Wheels, Bermuda as at March 31, 2014 and the results of its operations and cash flows for the year then ended in accordance with accounting standards for not-for-profit organizations generally accepted in Bermuda and Canada. December XX,

4 Statement of Operations General Capital Endowment March 31, March 31, Fund asset Fund Fund $ $ $ $ $ Assets Current assets Cash and cash equivalents (note 3(a)) 60,871-26,689 87, ,200 Net accounts receivable 9, ,963 8,508 Interest receivable (note 3(b)) ,415 Prepaid expenses 4, ,710 4,975 76,018-26, , ,098 Non-current assets Term deposits (note 3(b)) ,050 Available-for-sale investments (note 4) 35,308-1,630,095 1,665,403 1,175,250 Capital assets (note 6) - 359, , ,635 Liabilities 35, ,141 1,630,095 2,024,544 1,679, , ,141 1,656,784 2,127,251 2,079,033 Current liabilities Accounts payable 39, ,954 27,056 Current portion of deferred contributions related to capital assets (note 7) - 15,599-15,599 15,599 39,954 15,599-55,533 42,655 Deferred contributions related to capital assets (note 7) - 183, , ,302 Fund balances 71, ,839 1,656,784 1,887,995 1,837, , ,141 1,656,784 2,127,251 2,079,033 Approved by the Board of Directors Director Director The accompanying notes are an integral part of these financial statements

5 Statement of Operations Operating Capital Endowment Fund asset Fund Fund $ $ $ $ $ Revenues Food income 132, , ,999 Donations 167, , ,751 Government grants 48, ,000 48,000 Interest and dividend income 2, ,756 16,158 Tag day 16, ,945 15,536 Amortization of deferred contributions (Note 7) - 15,599-15,599 15,599 Net Realized and Change in Unrealized gain on Endowment fund and available-for-sale investments (Note 4 & 5) 10, , ,666 62, ,034 15, , , ,136 Expenses Food 152, , ,689 Salaries, wages and employee benefits (Note 9) 162, , ,207 Maintenance and repairs 36, ,297 33,484 Amortization of capital assets - 17,494-17,494 22,108 Utilities 26, ,589 26,369 Kitchen supplies 25, ,404 16,369 Audit fee 21, ,650 21,650 Office supplies and miscellaneous 2, ,938 2,205 Bad debts Insurance 7, ,185 7,180 Telephone 2, ,281 2,378 Bank charges , ,990 17, , ,518 Net surplus (deficit) of revenues over expenses (60,956) (1,895) 103,733 40, ,618 The accompanying notes are an integral part of these financial statements

6 1. General Meals on Wheels, Bermuda (the Association ) is registered as a charitable organization under the Charities Act 1978 (Registration no. 104) whose primary purpose is to provide meals to the elderly or infirm and other people who will benefit from such services. In order to maintain its status as a registered charity, the Association has a legal obligation to submit an annual income and expenditure statement. The Association is not, nor has ever been, in default of this regulation. The Association was incorporated as a Company Limited by Guarantee under the laws of Bermuda on February 4, The Association is registered under and regulated by The Companies Act 1981 and the Charities Act Summary of significant accounting policies The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in Bermuda and Canada. The significant accounting policies adopted by the Association are as follows: (a) Accounting estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements. Estimates also affect the reported amounts of earnings and expenses for the reporting period. Actual results could differ from those estimates. (b) Fund accounting The Institute follows the restricted fund method of accounting. (c) Capital Asset Fund The Capital Asset Fund accounts for all capital assets and donations. (d) Operating Fund The Operating Fund accounts for all transactions resulting from the operation of the Association. This fund records transactions that do not fall under the focus of the Endowment Fund as defined below. (e) Endowment Fund The Endowment Fund reports resources contributed to support the operations of the Association. (f) Revenue recognition The Association follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred or until the restrictions were satisfied. Unrestricted contributions are recognized as revenue when the amounts can be reasonably estimated and collection is reasonably assured. Investment income is recognized on the accrual basis. Food income is recognized upon delivery of meals to the customer for those designated as having the ability to pay the Association. Food is also provided to individuals who cannot afford to pay. The - 7 -

7 revenue for benefit in kind for individuals who cannot afford to pay is not recognized in the financial statements. (g) Capital assets and amortization Capital assets are carried at cost less a provision for amortization. Capital assets are amortized on straightline basis over their estimated useful lives as follows: Building Improvements Furniture and fixtures/equipment 30 years 10 years 5 years (h) Donations Volunteer efforts and non-cash donations, except those related to capital assets and professional audit services, are not reflected in the financial statements as these amounts are not susceptible to objective measurement or valuation. Donated audit services are included at fair value in operations for the year. (i) (j) Bank of Butterfield endowment fund The Bank of Butterfield endowment fund (the Fund ) is recognized at fair value on the statement of financial position. The fair value of the Fund is determined by reference to its quoted market price. Realized and unrealised gains and losses are reported as part of net assets restricted for endowment in the statement of operations. Available-for-sale investments Available-for-sale investments are recognized at fair value on the statement of financial position. The fair value of the investment is determined by reference to its quoted market price. Investments in Funds are carried at fair value. Shares or units in Underlying Funds will be valued at the actual net asset value as of the close of business on the relevant Valuation Day. Realized gains and losses on unrestricted investments are reported as part of surplus (deficiency) of revenues over expenses, while unrealized gains or losses are presented under unrestricted net assets in the statement of operations. (k) Cash and cash equivalents Cash and cash equivalents include cash on account and term deposits with maturities from the date of acquisition of three months or less which are readily convertible to known amounts of cash and are subject to insignificant changes in value. (l) Term deposits Term deposits classified as non-current are recorded at cost. Interest on such term deposits is accrued and, to the extent it is due within one year, recorded within current assets

8 3. Cash, cash equivalents and term deposits (a) Cash and cash equivalents of $60,871 ( $178,945) include $28,886 ( $29,436) of restricted funds, of which $24,935 is explained in note 8 and the remaining $3,951 relates to funds held on behalf of staff (b) Term Deposits $ $ Term deposit, 5/1/13, 1% - 1,100 Term deposit, 5/1/13, 1% - 2,200 Term deposit, 5/1/13, 1% - 2,750 Term deposit, 4/4/13, 1.1% - 125, ,050 Term deposits have been classified as non-current in the Statement of Financial Position. These deposits are held primarily for purposes of earning interest income. Management intends to hold the investments on a longterm basis and as such, the principal is preserved and the term deposits roll over each year. As at March 31, 2014 interest of $Nil ( $1,415) was receivable on the term deposits. 4. Available-for-sale investments Cost Market value Cost Market value General Fund $ $ $ $ Equity investment The Bank N.T. Butterfield & Son Ltd. nil common shares and nil contingent value preference shares ( ,923 common shares and 1,493 contingent value preference shares) 23,493 35,308 23,493 24,375 23,493 35,308 23,493 24,375 No. of shares/ Cost Market value Cost Market value Endowment Fund units $ $ $ $ Fixed Income Global Voyager Global Fixed Income 6, , , , ,694 Global Voyager Short Term Income 6, , ,243 80,337 80,225 PIMCO Total Return Inst Acc 5, , , , ,406 Schroder Intl Glb 2, , ,955 74,600 80, , , , ,

9 No. of shares/ Cost Market value Cost Market value units $ $ $ $ Equity investments Global Voyager Preferred 17, , , , ,920 Global Voyager International Equity 13, , , , ,893 Global Voyager North American Equity 8, , , , ,651 Global Voyager US Small Cap Equity Equity 5,697 75,286 99,349 63,000 69, , , , ,709 Fund Kronos , ,721 64,000 64,192 GAM Trading II Inc-USD Open ,900 84,091 68,100 73, Bank of Butterfield Endowment Fund 182, , , ,686 1,467,024 1,630,095 1,088,537 1,147,875 On July 4, 2008, the Association received from the Butterfield Trust (Bermuda) Limited, trustee of the Butterfield Bank Charitable Foundation, an endowment of $250,000 worth of Bank of N.T. Butterfield stock (16,667 gifted shares) to be held in trust with the following conditions: 1) All cash dividends from the shares can be distributed to the Association in amounts and proportions determined by the Association; 2) The shares cannot be sold or distributed for the first 3 years; 3) During year 4, up to 25% of the Shares held on December 31 year three can be sold and reinvested in other assets; 4) During year 5, up to 50% of the Shares held on December 31 year three can be sold and reinvested in other assets; 5) During year 6, up to 75% of the Shares held on December 31 year three can be sold and reinvested in other assets; 6) All remaining Shares held can be sold and reinvested in year 7 and onwards; 7) After year 3, up to 5% of the value of the Fund will be available for distribution based on the December 31 valuation of the proceeding year. Cash dividends distributed during the year will form part of this 5%; 8) In all cases, in the event the cash dividends from the shares exceed 5% of the appointed Fund, no other funds can be distributed for that year. At March 31, 2014, the Association held nil (2013 nil) shares Bank of N.T. Butterfield shares with a market value of $nil ( $nil). In 2013, 100% of the endowment shares were sold back to the Butterfield trust for $21,

10 6. Capital assets Accumulated Net book Net book Cost Amortization Value Value $ $ $ $ Land 180, , ,000 Building 422, , , ,198 Improvements 40,150 40,447 (297) 27 Furniture and fixtures/equipment 216, ,429 3,333 6, , , , ,635 The land was previously held in the name of the M.O.W. Landholding Trust, which is a Bermuda trust established for the specific purpose of supporting the charitable objectives of the Association. In August 2010 the M.O.W. Landholding Trust transferred full ownership of the land to the Association. 7. Deferred contributions related to capital assets The changes in the deferred contribution balance in the year are as follows: Deferred contributions Designated on capital for capital assets projects Total Total $ $ $ $ Balance, beginning of year 189,966 24, , ,500 Amounts amortized to revenue (15,599) - (15,599) (15,599) Balance, end of year 174,367 24, , ,901 (a) Deferred contributions on capital assets Deferred contributions on capital assets represent contributions from donors to assist with the purchase of the Association s building and equipment and are being amortized to revenue over the life of the building and equipment to match the revenue with the related amortization expense. (b) Designated for capital projects In 2001, the Association received a $40,000 donation where the donor stipulated that the funds were to be invested, with the earnings thereon to be included in unrestricted revenue of the Association. However, should the Association wish, it may use the donated funds for a designated capital project. During the year ended March 31, 2014, the Board did not approve any funds to be used ( $Nil). As at March 31, 2014 the remaining funds amounting to $24,935 ( $24,935) were held in cash and cash equivalents

11 8. Capital disclosures The Association defines capital, for its own purposes, as the unrestricted cumulative excess of revenues over expenses. During 2011, the Association s objective when managing capital, which was unchanged from 2010, was to hold sufficient unrestricted net assets to enable it to withstand negative unexpected financial events and continue as a going concern. The Association seeks to achieve this objective by minimizing its exposure to financial leverage and variable financial obligations and by holding cash and cash equivalents and term deposits to maintain sufficient liquidity to enable it to meet its obligations as they become due. As at March 31, 2014, the Association s accumulated unrestricted net assets amounted to $84,320 ( $322,212). The Association is not subject to any externally imposed requirements on capital. 9. Pension plans The Association maintains a defined contribution pension plan in accordance with The National Pension Scheme (Occupational Pension) Act 1998, which is administered by Argus and covers the majority of its employees. During the period, the Association made contributions of $4,605 ( $4,936) into the plan. The Association also pays monthly social insurance payments in accordance with The Contributory Pensions Act The payments for the year ended March 31, 2014 was $6,671 ( $6,529). 10. Financial assets and liabilities The estimated fair values of cash and cash equivalents, term deposits, investments, accounts receivable, interest receivable and accounts payable approximate their carrying values. Financial assets which potentially subject the Association to concentrations of credit risk consist primarily of cash and cash equivalents, term deposits and accounts receivable. In management s opinion, the risk of loss due to credit risk is not significant as cash and cash equivalents and term deposits are placed with high credit quality institutions and accounts receivable are presented net of provisions for uncollectible amounts totaling $2,694 ( $2,694). 11. Government remittances As of March 31, 2014, included in accounts payable is $2,940 (2013: $3,243) due to the Bermuda Government