Financial Statements. St. John Council for Ontario December 31, 2013

Transcription

1 Financial Statements St. John Council for Ontario

2 INDEPENDENT AUDITORS' REPORT To the Members of St. John Council for Ontario REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of St. John Council for Ontario, which comprise the balance sheet as at, and the statements of operations, changes in net assets and cash flows 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 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. Auditors' 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 auditors' 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 auditors consider 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.

3 - 2 - 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 St. John Council for Ontario as at, 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. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS As required by the Corporations Act (Ontario), we report that, in our opinion, Canadian accounting standards for not-for-profit organizations have been applied on a basis consistent with that of the preceding year. Toronto, Canada, April 10, 2014.

4 As at December 31 BALANCE SHEET $ $ ASSETS Current Cash and cash equivalents 2,362,052 2,579,678 Accounts receivable [note 11[a]] 958,927 1,080,393 Inventory 272, ,387 Prepaid expenses 230, ,953 Total current assets 3,824,505 4,121,411 Long-term Investments [note 3] 26,691,958 22,980,894 Capital assets, net [note 4] 4,090,385 4,048,757 Total long-term assets 30,782,343 27,029,651 34,606,848 31,151,062 LIABILITIES AND NET ASSETS Current Bank indebtedness [note 5] 775, ,545 Accounts payable and accrued liabilities [note 11[a]] 788, ,301 Deferred revenue 217, ,490 Total current liabilities 1,781,169 1,232,336 Long-term Deferred capital contributions [note 6] 877,189 1,009,149 Total long-term liabilities 877,189 1,009,149 Total liabilities 2,658,358 2,241,485 Contingencies and commitments [notes 7, 10 and 11[a]] Net assets Internally restricted [note 8] 7,465,417 6,393,777 Endowment [note 9] 16,541,886 14,835,390 Unrestricted 7,941,187 7,680,410 Total net assets 31,948,490 28,909,577 34,606,848 31,151,062 See accompanying notes On behalf of St. John Council for Ontario: Alan McBride Chair John Stewart Treasurer

5 STATEMENT OF OPERATIONS Year ended December $ $ REVENUE Training programs 12,569,136 12,531,857 Donations and fundraising [note 6] 1,780,260 1,969,082 Store sales 1,382,200 1,358,857 Government grants 535, ,969 Nevada and bingo 262, ,339 Rental and sundry 871, ,528 17,400,105 17,556,632 EXPENSES Service delivery and administration [notes 5[b], and 11[b]] 18,097,915 17,708,271 Deficiency of revenue over expenses before the following (697,810) (151,639) Investment income [notes 3[c] and 9] 2,185,550 1,195,260 Net gain on sale of capital assets 18, ,693 Excess of revenue over expenses for the year 1,506,428 1,204,314 See accompanying notes

6 STATEMENT OF CHANGES IN NET ASSETS Year ended December Internally restricted Endowment Unrestricted Total $ $ $ $ [note 8] [note 9] Net assets, beginning of year 6,393,777 14,835,390 7,680,410 28,909,577 Excess of revenue over expenses for the year 1,506,428 1,506,428 Investment gain related to externally restricted endowments [note 9] 1,532,485 1,532,485 Interfund transfers [notes 8 and 9] 1,071, ,011 (1,245,651) Net assets, end of year 7,465,417 16,541,886 7,941,187 31,948, Internally restricted Endowment Unrestricted Total $ $ $ $ [note 8] [note 9] Net assets, beginning of year 6,395,592 13,946,084 6,834,493 27,176,169 Excess of revenue over expenses for the year 1,204,314 1,204,314 Investment gain related to externally restricted endowments [note 9] 529, ,094 Interfund transfers [notes 8 and 9] (1,815) 360,212 (358,397) Net assets, end of year 6,393,777 14,835,390 7,680,410 28,909,577 See accompanying notes

7 STATEMENT OF CASH FLOWS Year ended December $ $ OPERATING ACTIVITIES Excess of revenue over expenses for the year 1,506,428 1,204,314 Add (deduct) non-cash items Investment income reinvested (2,185,550) (1,195,260) Amortization of capital assets 591, ,870 Net gain on sale of capital assets (18,688) (160,693) Amortization of deferred capital contributions (157,130) (134,501) (263,052) 293,730 Changes in non-cash working capital balances related to operations Accounts receivable 121, ,018 Inventory (17,273) 9,012 Prepaid expenses (24,913) 126,773 Accounts payable and accrued liabilities 100,409 (117,953) Deferred revenue 2,814 (54,441) Cash provided by (used in) operating activities (80,549) 491,139 INVESTING ACTIVITIES Purchase of capital assets (643,477) (1,059,125) Proceeds on sale of capital assets 28, ,688 Withdrawals from (Purchases of) investments, net 6,971 (548,604) Cash used in investing activities (607,857) (1,321,041) FINANCING ACTIVITIES Contributions restricted for capital asset purchases 25, ,022 Increase in bank indebtedness 445,610 67,916 Repayment of long-term debt (183,315) Cash provided by financing activities 470, ,623 Net decrease in cash and cash equivalents (217,626) (526,279) Cash and cash equivalents, beginning of year 2,579,678 3,105,957 Cash and cash equivalents, end of year 2,362,052 2,579,678 See accompanying notes

8 1. ORGANIZATION St. John Council for Ontario ["Council for Ontario"] is a provincial body of The Priory of Canada of the Most Venerable Order of the Hospital of St. John of Jerusalem ["St. John Priory of Canada"]. Council for Ontario was incorporated on October 24, 1989 by Letters Patent issued under the Corporations Act (Ontario). Council for Ontario is a registered charity [Reg. # RR0001] and, while registered, is exempt from income taxes. Council for Ontario provides first-aid and health-care training and public first-aid service through a number of branches and community services units throughout the province. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements are prepared in accordance with Part III of the Chartered Professional Accountants of Canada ["CPA Canada"] Handbook Accounting, which sets out generally accepted accounting principles for not-for-profit organizations in Canada and includes the significant accounting policies set out below. Basis of presentation These financial statements present the financial position and results of operations of Council for Ontario that include the assets, liabilities and results of operations of the Provincial Head Office, branches and community services units. Revenue recognition Council for Ontario follows the deferral method of accounting for contributions, which include government grants, bequests and other donations. Grants and bequests are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Other donations are recognized when received since pledges are not legally enforceable claims. Unrestricted contributions are recognized as revenue when recorded in the accounts. Externally restricted contributions are deferred when recognized in the accounts and recognized as revenue in the year in which the related expenses are incurred, except for endowment contributions, which are recognized as direct increases in net assets. Training fees are recognized when classes have been completed. Sales and service revenues are recognized when the services are rendered and the goods provided. 1

9 Investment income (loss), which consists of interest, dividends, income distributions from pooled funds and realized and unrealized gains and losses, is recorded in the statement of operations, except to the extent it is externally restricted, in which case it is added to (deducted from) endowment net assets or other restricted balances on the balance sheet. Cash and cash equivalents Cash and cash equivalents consist of cash on deposit and short-term investments with a short maturity of approximately three months or less from the date of purchase, unless they are held for investment rather than liquidity purposes, in which case they are classified as investments. Inventory Inventory is valued at the lower of cost, determined on a first-in, first-out basis, and net realizable value. Capital assets and licenses Purchased capital assets are recorded at acquisition cost. Contributed capital assets are recorded at fair market value at the date of contribution. Amortization is provided on a straight-line basis over the estimated useful lives of the assets as follows: Tangible Buildings Vehicles Equipment Leasehold improvements Intangible Licensed software years 5-10 years 3-10 years term of the lease 5-7 years Financial instruments Investments are recorded at fair value. Transactions are recorded on a trade date basis and transaction costs are expensed as incurred. Other financial instruments, including accounts receivable and accounts payable, are initially recorded at their fair value and are subsequently measured at cost, net of any provisions for impairment. 2

10 Contributed materials and services Because of the difficulty of determining their fair value, contributed materials and services are not recognized in the financial statements. Post-employment benefits Defined contribution plan accounting is applied for a multi-employer defined benefit pension plan, whereby contributions are expensed on an accrual basis since Council of Ontario has insufficient information to apply defined benefit accounting. Foreign currency translation Transactions denominated in foreign currencies are translated into Canadian dollars at exchange rates in effect on the date of the related transaction. Monetary assets and liabilities are translated into Canadian dollars at exchange ranges as at the date of the balance sheet. Exchange gains and losses are included in income, except to the extent that they relate to investments, in which case they are accounted for consistent with investment income. 3. INVESTMENTS [a] Investments have an asset mix as follows: $ % $ % Cash and cash equivalents 881, ,596 3 Short-term 1,303, ,267,323 5 Canadian fixed income 7,642, ,458, Canadian equities 5,965, ,620, United States equities 7,207, ,123, Other foreign equities 3,690, ,738, ,691, ,980, Investments in pooled funds have been allocated among the asset classes based on the underlying investments in the pooled funds. 3

11 [b] As at, Canadian fixed income investments held outside pooled funds of $4,677,549 [ $5,482,466] have a weighted average term to maturity of four years [ five years] and a weighted average return of 2.7% [ %]. [c] Investment income recorded in the statement of operations is calculated as follows: $ $ Total investment income 3,850,625 1,845,198 Less management fees (132,590) (120,844) Net investment income 3,718,035 1,724,354 Less income on investments held for endowment net assets not available for spending [note 9] (1,532,485) (529,094) Net investment income 2,185,550 1,195, CAPITAL ASSETS [a] Capital assets consist of the following: 2013 Accumulated Net book Cost amortization value $ $ $ Tangible Land 481, ,715 Buildings 3,986,799 2,276,184 1,710,615 Vehicles 2,429,694 1,920, ,606 Equipment 2,379,063 1,962, ,248 Leasehold improvements 1,379, , ,488 Intangible Licensed software 394,597 66, ,713 11,051,726 6,961,341 4,090,385 4

12 2012 Accumulated Net book Cost amortization value $ $ $ Tangible Land 481, ,715 Buildings 3,978,978 2,157,228 1,821,750 Vehicles 2,527,151 2,069, ,972 Equipment 2,601,284 2,129, ,191 Leasehold improvements 1,401, , ,184 Intangible Licensed software 85,041 58,096 26,945 11,075,187 7,026,430 4,048,757 [b] Capital assets include licensed software under development with a cost of $299,694 [2012 $24,139] that is not being amortized. [c] The land and buildings are recorded at historical cost, which does not reflect current market value. 5. BANK INDEBTEDNESS [a] Council for Ontario maintains [i] an unsecured operating line of credit of $1,000,000, that is charged interest at the bank's prime rate of 3% at ; [ii] a demand credit facility not to exceed $1,200,000 for the purchase and renovation of facilities with interest charged at the bank's prime rate of 3% plus 0.25% which is 3.25% at, with investments with a fair value of $1,200,000 pledged as security; and [iii] a demand nonrevolving credit facility of $600,000 for the purchase of software with interest charged at the bank prime rate of 3% plus 0.25% which is 3.25% at. As at, there were drawings of $324,124 [ $154,545] on the operating line of credit, $158,472 [ $175,000] on the facility for the purchase and renovation of facilities and $292,559 [ nil] on the demand non-revolving credit facility for the purchase of software. [b] Interest of $21,398 [ $16,515] is included in expenses reported in the statement of operations. 5

13 6. DEFERRED CAPITAL CONTRIBUTIONS Deferred capital contributions represent the unamortized amount of donations received for the purchase of capital assets. The changes in the deferred capital contributions balance are as follows: $ $ Balance, beginning of year 1,009, ,628 Amortization of deferred capital contributions included in donations and fundraising revenue (157,130) (134,501) Contributions restricted for capital asset purchases 25, ,022 Balance, end of year 877,189 1,009, CONTINGENCIES AND COMMITMENTS [a] Council for Ontario is named as a defendant in legal actions that management is contesting. Management believes any potential judgment or settlement would be covered by insurance. [b] Council for Ontario leases certain premises and equipment under operating leases. The aggregate minimum annual commitments under operating leases in future years are as follows: , , , , ,611 Thereafter 707,894 3,895,103 In addition to minimum rentals, leases for certain premises require the payment of various operating costs. $ 6

14 8. INTERNALLY RESTRICTED NET ASSETS Internally restricted net assets consist of the following funds that have been designated as restricted by Council for Ontario and which may be used as directed by the Board of Directors [the "Board"] of Council for Ontario: $ $ Provincial Head Office 3,859,585 2,835,214 Peel Region Branch 1,113,801 1,113,801 Loyalist Branch 384, ,484 Hamilton Branch 857, ,995 Other branches 1,249,442 1,211,283 7,465,417 6,393,777 Each year, the Board determines what amount, if any, should be transferred to/from internally restricted net assets. In 2013, a net amount of $1,071,640 was transferred to internally restricted net assets from unrestricted [ $1,815 from internally restricted net assets to unrestricted]. 9. ENDOWMENT NET ASSETS Endowment net assets comprise the resources that are required by the donor or the Board to be maintained by Council for Ontario on a permanent basis. The Board has a policy to transfer certain donations to endowment net assets when there is no current intention of making the original donation available for spending. Endowment net assets consist of the following: $ $ Externally restricted 14,756,300 13,223,815 Internally restricted 1,785,586 1,611,575 16,541,886 14,835,390 Council for Ontario has a policy with the objective of protecting the purchasing power of the endowments by requiring the reinvestment of income not made available for spending. The policy is based on an anticipated long-term real rate of return on investments of 4.5% [2012-5%]. In any particular year, should net investment income be insufficient to fund the amount to be made 7

15 available for spending or the investment return is negative, the amount is funded by a transfer from endowment net assets. In 2013, investment income of $2,124,470 [ $1,283,938] was earned on externally restricted endowments, of which $591,985 [ $754,844] was made available for spending in accordance with the Board policy described above and recorded as investment income in the statement of operations, and the balance of $1,532,485 [ $529,094] was recorded as a direct increase to endowment net assets. In 2012, $354,844 was transferred from unrestricted to endowment net assets. Investment income of $258,159 [ $96,347] was earned on internally restricted endowments. This amount was recorded as investment income in the statement of operations and transferred from unrestricted to internally restricted endowment net assets in the statement of changes in net assets. An amount of $84,148 [ $90,797] in connection with these internally restricted endowments was made available for spending and transferred from internally restricted endowment net assets to unrestricted. 10. PENSION COSTS AND OBLIGATIONS St. John Priory of Canada administers a contributory defined benefit pension plan, the St. John Priory of Canada Properties Pension Plan [the "Plan"], on behalf of the provincial and territorial councils. The Plan covers employees of St. John Priory of Canada and the councils across Canada. The Plan provides pensions based on length of service and final average earnings. The annual funding requirements are determined in consultation with the actuaries to provide longterm stability to the Plan. Based on the latest actuarial valuation of the Plan, on a going concern basis as of January 1, 2013, the Plan's net assets available for benefits of $15,295,400 with pension obligations of $17,274,500 results in a deficit of $1,979,100. Council for Ontario is making payments to the Plan based on a schedule prepared by the Plan's actuary designed to fund its share of the deficit over 5 years. As an alternative to participation in the Plan, St. John Priory of Canada offers employees a Group Registered Retirement Savings Plan ["RRSP Plan"] in which employee contributions are matched up to a maximum of 2% of their earnings. 11. RELATED PARTY TRANSACTIONS [a] As at, there is an amount receivable from St. John Priory of Canada of $10,019 [2012 nil] included in accounts receivable and an amount payable to St. John Priory of Canada of $43 [2012 nil] included in accounts payable and accrued liabilities. [b] During the year, Council for Ontario expensed the following charges from St. John Priory of Canada: $892,858 [ $964,242] in assessments, $224,364 [ $247,555] in maintenance fees for licensed software and $6,591 [ $6,446] in insurance premiums. In 8

16 addition, Council for Ontario paid $285,417 [ $24,139] to St. John Priory of Canada in connection with the development of software that Council for Ontario will be licensed to use once the software is available for use. [c] There is an annual commitment to St. John Priory of Canada relating to maintenance fees for the licensed software which, in 2014, is expected to be approximately $225, FINANCIAL INSTRUMENTS Council for Ontario is exposed to various financial risks through transactions in financial instruments. Foreign currency risk Council for Ontario is exposed to foreign currency risk with respect to its investments denominated in foreign currencies, including the underlying securities of its investment in pooled funds denominated in foreign currencies, because of fluctuations in the relative value of foreign currencies. Credit risk Council for Ontario is exposed to credit risk with respect to its accounts receivable and its short-term and fixed income securities, including the underlying securities of its investment in pooled fund. Interest rate risk Council for Ontario is exposed to interest rate risk with respect to its investments in fixed income securities and a pooled fund which holds fixed income securities, the values of which will fluctuate with changes in market interest rates. In addition, Council for Ontario is exposed to interest rate risk with respect to its operating line of credit since the interest rate is linked to the bank's prime rate which changes from time to time. Liquidity risk Council for Ontario is exposed to the risk that it will encounter difficulty in meeting obligations associated with its financial liabilities. 9

17 Other price risk Council for Ontario is exposed to other price risk through changes in market prices [other than changes arising from interest rate or currency risks] in connection with its investments in equity securities and pooled funds. 10

18