Auditor's Report and Financial Statements

Transcription

1 Ontario Association of Architects Auditor's Report and Financial Statements Ontario Association of Architects

2 Senior Vice President & Treasurer's Report Overview You will find included with the Ontario Association of Architects 2009 Annual Report the Financial Statements for the past fiscal year ended November 30, These statements were reviewed and approved by the OAA Finance and Audit Committee on February 22, 2010 after being advised by our Auditors, PKF Hill LLP, Chartered Accountants that they would be issuing an unqualified audit report. OAA Council formally received the 2009 Financial Statements at their meeting on March 4, As you review these statements, I would like to take this opportunity to highlight and summarize a few of the key areas of interest. Overall, with the help of regular monitoring by our staff, our financial position remains stable. For the current fiscal year we are pleased to be showing a surplus of revenue over expenses in the amount of $2,533,285*. *Please note that of this total surplus amount, $1,900,743 relates to income from OAA s investment in Pro-Demnity Insurance, which is represented by the settlement from a provincial sales tax assessment of $2,071,675; and a deficit from ongoing operations in 2009 of $170,932. Significant adjustments in their numbers this year relate to increased provisions for reserves as dictated by the actuary and a one-time revenue item related to the PST dispute that was settled in favour of Pro-Demnity. Additional detail is available in the Pro-Demnity Financial Statements and in the OAA Notes to Financial Statements. The primary reason for the remaining surplus is a remarkable increase in the number of members joining in We attribute this increase to a combination of positive results from the changes to the Intern Process and ExAC examination as well as a restructuring of long time intern fees and Certificate of Practice (CofP) fees. While we are happy to have sufficient revenue to meet our expenses, we need to remember that after factoring out such unexpected and fortuitous financial events that happened during this past year and that are outlined in more detail elsewhere, the remaining surplus represents only a small percentage of our gross revenues. It is and continues to be a delicate balance. The OAA management team continues as in previous years with three senior positions reporting to Council: Director of Operations, Director of Policy and Registrar. With the exception of the departure of the Deputy Registrar mid 2009, there were no significant staff changes in A Task Group of Council and Staff are currently taking this opportunity to review activities and workload in the Office of the Registrar and the position requirements for a Deputy Registrar with a view to filling this role in Balance Sheet: Assets: Our Assets remain stable and show an increase when compared with the previous year. There are some fluctuations between cash and short term deposits depending upon reporting dates for maturity dates etc. Our surplus revenue is reflected in a stronger cash position when compared to the same time last year. Liabilities and Members Equity: Our current liabilities have increased slightly but not significantly over the previous year, primarily in accounts payable and other accrued liabilities. The Building Reserve Fund currently stands at $120,000. The outstanding balance on the building Mortgage now stands at $2,041,222. Total Members Equity stands at $26,930,657. Please remember that of this amount, $24,739,702 is related to our investment in Pro-Demnity Insurance Company. Of the remainder, the amount of $1,220,555 is held as an unrestricted reserve, with other amounts accounting for the Building Reserve Fund as well as other property and equipment, and any as yet unrealized gains on any financial assets held by the OAA. Members Equity is a book entry which reflects the cumulative results of the years of operation of the OAA. At the end of each fiscal year, the net surplus or deficit is closed to the Members Equity account via journal entry. This entry takes into consideration such items as depreciation on building, computers and equipment as well as accruals for expenses related to prior years. The maximum amount of Members Equity held as a reserve by non-profit organizations such as the OAA is generally accepted as one year s total membership fees in order to comply with taxation requirements. Our Members Equity is within the required and recommended limits. Statement of Revenue and Expenses Specific Revenue items are summarized on the Statement of Operations on page 3 and expenses are detailed in a schedule on page 13 of the Financial Statement. Significant changes over the previous year are highlighted as follows: Revenue: Where does our money come from Showing an increase in revenue over last year are the following categories: Annual membership fees and related revenue. We have 170 more members this year than at the same time last year, resulting in an unexpected revenue increase. Restructuring of Intern Fees. This has resulted in a number of Long- Term Interns moving up into full Membership. Classified Advertising Revenue from our Web site ExAC Registration Income. This program, shared with other provinces is now in its 2nd year and has been well accepted and subscribed by interns (see also additional notes below) Continuing Education (related to end of cycle) Conference and Annual Meeting ( considered within a normal fluctua tion) Showing a decrease in revenue over last year are the following categories: Investment Income (market conditions) Publications (primarily CHOP) Rental/Catering Revenue (reduced activity at 111 Moatfield) Expenses: Where does our money go Direct program expenses are summarized on the revenue/expense statement and detailed in a schedule on page 13 of the Financial Statement. Significant changes over the previous year are highlighted as follows: Showing an increase in expenses over the previous year are the following categories: Conference and Annual Meeting (normal fluctuation offset by additional revenue) Communications Website (new website development) Internet Access and Hosting (service upgraded to meet demand) Credit Card Charges (more members paying with credit card) Continuing Education (end of cycle requiring additional sessions) Showing a reduction in expenses over the previous year are the following categories: Overall Council, Committees and Task Group Expenses Overall Office of the Registrar (Act Enforcement Activities) Practice Consultation Service (PCS program on hold, now set for roll out in 2010) Admission Course Overall Professional Fees Staff Salaries and benefits increased by approximately 6% including taxes and benefits reflecting regular cost of living increases, increased costs of the associated benefits and taxes, as well as an increase in temporary staffing requirements over the year OAA ANNUAL REPORT 2009 OAA ANNUAL REPORT 42

3 Other Issues Building Maintenance Fund There is currently $120, in the internally restricted Building Maintenance Fund that was established to fund anticipated renovations necessary for the OAA Headquarters Building. Pro-Demnity Insurance As is noted above, Pro-Demnity s financial position remains stable and this year returned $1,900,743 to Members Equity due primarily to a one-time unusual event. Additional detail is available in the Pro-Demnity Financial Statement and in the notes to the Financial Statements. The mortgage held by Pro-Demnity for the building currently stands at $2,041,222 and bears interest at 7% and at the current rate will be fully paid by January 15, The current (2009) interest expense of $143,060 is included in the building schedule of expenses. The principal payment in 2009 was $54,505 for a total expenditure of $197,565. Examination for Architects in Canada (ExAC) During the year, the OAA entered into an agreement with 8 other provincial associations to manage the ExAC examination process and the associated Committee for the Examination for Architects in Canada ( CExAC ). The agreement also outlines how revenues are to be allocated and how costs, primarily related to the development of the exam, are to be recovered. The OAA has been appointed to act as the administrator of the program. During 2009, the OAA recognized $83,860 of revenue which represents its portion of the current year exam fees and its portion of the recovery of development costs. Amounts to be distributed to the other provincial associations of $360,649 have been recorded as accounts payable. The OAA has recorded their portion of the levy costs of $92,824 as an expense. Amounts receivable from the other provincial associations of $300,452, to recover development and current year operating costs, have been recorded as accounts receivable. New Web site Procedures for Improved Financial Reporting and Control In 2009, our new accounting (Dynamics GP) and database management software (imis) was implemented. This is the first full year of this new system and in the future will be tied into our new website and e-commerce capabilities to provide better and more efficient access for members to update their information and pay applicable fees. This new system has also given us more detailed and up to date information in order to monitor our financial position at any given time. Through the course of any given month or year, we may experience expenses arising from unforeseen circumstances such as legal challenges, discipline hearings, or extraordinary building and administrative expenses. Expenditures are reviewed on a monthly basis and adjustments made as necessary. Committees and program expenses are continually monitored in order to stay within budget and control costs. The monthly monitoring system keeps track of expenditures as well as provides historic comparisons. These financial controls have resulted in an effective organization that strives to provide the best possible service to the membership in the most cost effective manner. Budget Pressures for 2010 Over the course of the 2009 fiscal year, Council approved adjustments to the 2009 budget to accommodate new Council Policy Development projects that arose during the course of the year as well as for normal adjustments that typically occur throughout the year. While we were fortunate this past year to have had the additional revenue that covered additional expenses, this is something that needs to be reviewed frequently and monitored closely. The 2010 budget allocation for these unknown Council Development projects is currently set at $32,330 with an overall projected budget surplus for the upcoming year of $105,365 or approximately 2% of gross revenue. I am pleased that through careful management of your resources, that the OAA finances are well positioned to meet the challenges ahead. Best regards for Sincerely, As reflected by the increased spending in the category of Communications, the Council and staff are currently working towards launch of a new Web site in 2010 that will include new and more userfriendly content as a service to Members as well as e-commerce capabilities to provide on-line payment of member fees and updates of member information. We look forward to seeing the positive results of this investment that has spanned the last several years. James Farrow, Architect, OAA, OAQ, MRAIC 2009 Senior Vice President and Treasurer OAA ANNUAL REPORT 2009 OAA ANNUAL REPORT 44

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