UNITED CHRISTIAN BROADCASTERS CANADA FINANCIAL STATEMENTS. December 31, Welch LLP. An Independent Member of BKR International

Transcription

1 FINANCIAL STATEMENTS December 31, 2012

2 INDEPENDENT AUDITOR S REPORT To the Members of United Christian Broadcasters Canada We have audited the accompanying financial statements of UNITED CHRISTIAN BROADCASTERS CANADA, which comprise the statement of financial position as at December 31, 2012 and 2011 and the statements of revenue and expenditure and net assets (deficiency) and cash flows for the years 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 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 Corporation 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 qualified audit opinion. Basis for Qualified Opinion In Common with many not-for-profit organizations, United Christian Broadcasters Canada derives revenue from fundraising activities, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amounts recorded in the records of United Christian Broadcasters Canada. Therefore, we were not able to determine whether any adjustments might be necessary to fundraising revenue, excess of revenues over expenditures, and cash flows from operations for the years ended December 31, 2012 and 2011, current assets as at December 31, 2012 and 2011, and net assets as at January 1 and December 31 for both the 2012 and 2011 years. Our audit opinion on the financial statements for the year ended December 31, 2011 was modified accordingly because of the possible effects of this limitation in scope. -- Chartered Accountants 36 Bridge Street East, Napanee, Ontario K7R 1J8 T: F: W: An Independent Member of BKR.International Bellevi!le I Campbellford I Cornwall I Gatineau I Napanee I Ottawa I Pembroke I Picton I Renfrew I Trenton

3 UNITED CHRIS TIAN B R O AD CASTERS CANAD A Qualified Opimon 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 United Christian Broadcasters Canada as at December 31, 2012 and the resultsof its operations and its cash flows f6r the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. ~/~ Napanee, Ontario May 31, 2013 Chartered Accountants Licenced Public Accountants An Ihdependent Member of BKR International

4 (Incorporated under the laws of Canada) STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2012 ASSETS CURRENT ASSETS Accounts receivable Prepaid expenses TANGIBLE CAPITAL ASSETS - note ,808 8, , , , $ 104,628 14, , ,298 $ 238,420 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Bank overdraft Demand loan - note 7 Accounts payable and accrued liabilities Government remittances payable Deferred revenue - note 8 Current portion of long-term debt $ 2,540 $ 26,377 38,814 87,466 90,469 1,378 1,112 35,090 33,091 3,398 6,990 LONG-TERM DEBT - note 9 NET ASSETS Invested in capital assets - internally restricted Unrestricted net assets (deficiency) 168, ,241 (53,568) 79,673 $ 248, ,039 3, ,298 (42,739) 76,559 $ 238,420.;/~..~..~.~.~..~. ~.. Director ~Director (See accompanying notes)

5 STATEMENT OF REVENUE AND EXPENDITURE AND NET ASSETS (DEFICIENCY) REVENUE Donations - Word For You Today 81,768 - Fundraising 201,114 - Other 347,126 Advertising 189,460 Programme Revenue 45,051 Subscriptions & Book Sales 35,875 Special UCBI grant - note 10 13,673 Other EXPENDITURE Advertising and promotion 10,818 Affiliation fees - note I0 - Amortization - Bad debts 2,007 Broadcasting fees 22,179 Donations 1350 Dues, fees and subscriptions 1,099 Equipment maintenance 21,944 Fundraising 17,316 General and administrative 22,694 Gain on disposal - Insurance 10,076 Interest and bank charges 17,799 Miscellaneous 702 Office supplies 6,083 Professional fees 16,826 Property taxes 280 Rent 84,961 Repair and maintenance 2,945 Salaries and wages 410,502 Talent quest 1,400 Telephone and utilities 49,269 Travel and entertainment 6,315 Vehicle expenses 14,895 Word For You Today Excess of revenue over expenditure (expenditure over revenue) 105,724 Transfer between funds 16~ 88,940 NET ASSETS (DEFICIENCY), beginning of year Total Total 201~1 Belleville Chatham Cobourg Operations Caaital Tota... ~ltota.! , , , ,952 61, , ,848 10, ,187 45,301 1,037 91,389-35,875-13, ~]A) ,789 1,180 24,787-1,862 3,869 22,086 2,219 46, , ,125 16,539 4,502 42,985 12, ,813 11,810 2,252 36,756 9,527 1,913 21,516 9,079 2,443 29, ,195 4,521 2,277 1,403 9,763 3,237 2,275 22, ,328 8, ,139. 1, , ,286 75, ,205 1,600 3,000 29,922 2,419 81,610 2, ,345 5,237 1,751 21, ,107 81,768 63, , , , , , ,330 91,389 72,669 35,875 32,519 13,673 40, ,787 16,418 17,426 33,107 32,357 3,869 3,817 46,484 42,663 1, ,125 3,043 42,985 36,519 30,813 35,087 36,756 33,688 (59) 21,516 17,460 29,321 25,255 4,521 4,377 9,763 9,237 22,338 15, , ,837 5,050 4, , ,061 3,000 3,146 81,610 73,256 9,345 10,037 21,883 18, (30,611) (38,892) 36,221 (33,107) 3,114 13,690 ~ ~ 47._(~.~Q.~Q) (31,082) (68,687) (10,829) 13,943 3,114 13, ~ NET ASSETS (DEFICIENCY), end of year $ 195~592 $ $ (See accompanying notes)

6 STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES Excess of revenue over expenditure Amortization Change in non-cash working capital components: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities Deferred revenue CASH FLOWS FROM FINANCING ACTMTIES Repayment of capital lease obligation Repayment of demand loan Repayment of long-term debt CASH FLOWS FROM INVESTING ACTIVITIES Demand loan proceeds Capital assets purchased INCREASE (DECREASE) IN CASH CASH (BANK OVERDRAFT), beginning of year CASH (BANK OVERDRAFT), end of year _~2 $ 3,114 33,107 36,221 (2,180) 6,184 (2,737) 1,999 39,487 (1,186) (7,414) (8,600) 40,000 (47,050) (7,050) 23,837 (26,377) $ (2,540) 201~1 $ 13,690 32,357 46,047 (19,287) 255 (5,056) 00,076) 11,883 (1,85o) (8,780) (10,630) (22,157) (22,157) (20,904) (5,473) $ (26,377) (See accompanying notes)

7 NOTES TO THE FINANCIAL STATEMENTS 1. PURPOSE AND LEGAL FORM OF THE ORGANIZATION United Christian Broadcasters Canada was incorporated with Letters Patent dated August 17, 2001 under the Canada Corporations Act, as a corporation without share capital. The Corporation is a registered charitable organization and as such is exempt from income taxes. United Christian Broadcasters Canada is a not for profit organization and operates radio stations specializing in Christian programming. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. Tangible Capital Assets Capital assets are stated at cost. Amortization is provided on the declining balance method using the following annual rates: Furniture and equipment - 20% Vehicle - 30% Computer equipment and digital camera - 30% Leasehold improvements - 30% Radio equipment - 20% Radio transmitter - 20% Intangible Capital Assets The costs of intangible assets are capitalized upon meeting the criteria for recognition as an intangible asset; otherwise, costs are expensed as incurred. Intangible assets, consisting of computer software are measured at cost less accumulated amortization. Amortization of computer software is provided for on the declining balance basis at a rate of 100%. Revenue Recognition Donations are recorded when received by the Corporation. Other income is recorded when the goods or services are delivered. Contributed Services Volunteers contribute an indeterminable number of hours each year. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements.

8 NOTES TO THE FINANCIAL STATEMENTS. t SIGNIFICANT ACCOUNTING POLICIES - continued Non-Monetary Transactions In the normal course of its business, the Corporation enters into non-monetary transactions under which goods and services are acquired in exchange for advertising or other services. These goods and services, which would otherwise be payable in cash, are accounted for at their fair market value. Use of Estimates The preparation of financial statements in accordance with Canadian accounting standards for notfor-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Management makes accounting estimates when determining the estimated useful life of tangible capital assets used, intangible assets and its allowance for doubtful accounts. Actual results could differ from those estimates. Financial instruments The Corporation initially measures its financial instruments and financial liabilities at fair value adjusted by transactions costs in the case where a financial asset or liability is subsequently measured at amortized cost. The Corporation subsequently measures all of its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include cash and term deposits. Financial liabilities measured at amortized cost include trade creditor and accrued liabilities. ADOPTION OF CANADIAN ACCOUNTING STANDARDS FOR NOT-FOR-PROFIT ORGANIZATIONS These financial statements are prepared in accordance with Canadian accounting standards for notfor-profit organizations (ASNFPO). These are the Corporation s first set of financial statements prepared in accordance with ASNFPO. The Corporation presented financial statements under its previous Canadian generally accepted accounting principles ("CGAAP") annually to December 31, of each year up to and including December 31, As these financial statements are the first financial statements for which the Corporation has applied ASNFPO, the financial statements have been prepared in accordance with the provisions set out in Section 1501 of ASNFPO, First-time Adoption by Not-for-Profit Organizations. Accordingly, the Corporation has applied ASNFPO retroactively to all comparative financial statements presented. Section 1501 provides organizations with certain elective exemptions with respect to the retrospective application of ASNFPO.. However, the adoption of ASNFPO had no impact on the previously reported assets, liabilities, revenues, expenses and net assets of the Corporation, and accordingly, no adjustments have been recorded in the comparative statement of financial position, statement of revenue and expenditures and changes in net assets and the cash flow statement. Since

9 NOTES TO THE FINANCIAL STATEMENTS o ADOPTION OF CANADIAN ACCOUNTING STANDARDS FOR NOT-FOR-PROFIT ORGANIZATIONS (continued) no retrospective adjustments were required to the Corporation s assets, liabilities and net assets as at January 1,2011, the corporation s date of transition to ASNFPO, a statement of financial position as at that date has not been provided. The account balances under ASNFPO at.january 1, 2011 are consistent with the account balances that were reflected in the Corporation s previously issued statement of financial position as at December 31, FINANCIAL INSTRUMENTS Credit risk The Corporation provides credit to its clients in the normal course of operations. Approximately " 16% of the current year receivables are from one customer. This receivablehas been outstanding for two years. Arrangements are being made for payment of a significant portion of this receivable. The Corporation carries out, on a continuing basis, credit checks on its clients and a review of outstanding amounts. Liquidity risk Liquidity risk is the risk that the Corporation cannot meet its debts when they become due. The Corporation s management manages this risk by reviewing its expected future cash flow requirements. Other risks The Corporation is not exposed to interest, currency, market or other financial risks. There have been no changes in the Corporation s risk exposure from the prior year. 5. TANGIBLE CAPITAL ASSETS Capital assets consist of the following: 2012 Accumulated Cost amortization Net 2011 Net Furniture and equipment Vehicle Computer equipment Digital camera Leasehold equipment Radio equipment Radio transmitter 44,313 $ 35,424 23,484 14,827 75,478 56, ,175 48,199 92,748" 77, , , ,657 18, ,976 15,554 65,227 11,110 12,368 14, ,339 12,409 62,122 $ 531,74C 398; ,241 $ 119,298 "

10 NOTES TO THE FINANCIAL STATEMENTS o COMMITMENTS The Corporation leases a vehicle for $478 per month until November The minimum payments over the next three years are as follows: 2013 $ 5, $ 5, $ 5,258 Facilities and towers are rented on a monthly basis for $6,926 with no future commitments. 7. DEMAND LOAN The demand loan is secured by a general security agreement and is repayable at $798 per month, including principal and interest. 8. DEFERRED REVENUE Deferred revenue consists of prepaid advertising revenue, subscriptions received in advance and an amount due to a related party (United Christian Broadcasters International). The related party deferred revenue amounted to $8,1.67 ( $21,840). 9. LONG TERM DEBT Long-term debt consists of the following: Volkswagen finance % due September 2, 2013, repayable in blended monthly installments of principal and interest of $389, secured by a vehicle with a net book value of $5,796 ($9, ) TD Business Line - prime plus 4.25% due June 12, 2012 repayable in blended monthly installments of principal and interest of $460, secured by a registered general security agreement covering all the assets of the Corporation Less current portion of long-term debt ~1 $ 3,398 3,398 3,398 $ - 8,031 2,781 10,812 6,990 3,822 An Independent Member of BK, LR International

11 NOTES TO THE FINANCIAL STATEMENTS 10. RELATED PARTY TRANSACTIONS. United Christian Broadcasters International provides funding and donations to the Corporation for various reasons and in varying amounts. During 2012, United Christian Broadcasters International donated $13,673 ( $40,197). United Christian Broadcasters International charged affiliations fees of $17,426. During 2012 United Christian Broadcasters International decided to discontinue charging affiliation fees. 11. NON-MONETARY FIGURES During the year, the Corporation has entered into non-monetary transactions. Total advertising revenuerecognized from non-monetary transactions is $39,490 ( $31,876). An I~dependent Member of BKR International