PRESIDENT'S CHOICE CHILDREN'S CHARITY/LA FONDATION POUR LES ENFANTS LE CHOIX DU PRÉSIDENT

Transcription

1 Financial Statements of PRESIDENT'S CHOICE CHILDREN'S CHARITY/LA FONDATION POUR LES ENFANTS LE

2 KPMG LLP Vaughan Metropolitan Centre 100 New Park Place, Suite 1400 Vaughan ON L4K 0J3 Canada Tel Fax INDEPENDENT AUDITORS' REPORT To the Board of Directors of President's Choice Children's Charity/ La Fondation Pour Les Enfants Le Choix Du Président We have audited the accompanying financial statements of President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président, which comprise the statement of financial position as at December 31, 2017, the statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising 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 our 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, we 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.

3 Page 2 Basis for Qualified Opinion In common with many charitable organizations, President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président derives revenue from donations and fundraising, 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 President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président. Therefore, we were not able to determine whether, as at and for the years ended December 31, 2017 and December 31, 2016, any adjustments might be necessary to donations and excess (deficiency) of revenue over expenses reported in the statements of operations, excess (deficiency) of revenue over expenses reported in the statements of cash flows and current assets and net assets reported in the statements of financial position. This caused us to qualify our audit opinion on the financial statements as at and for the year ended December 31, 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 President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président as at December 31, 2017, and its results of operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Professional Accountants, Licensed Public Accountants May 24, 2018 Vaughan, Canada

4 Statement of Financial Position December 31, 2017, with comparative information for 2016 Assets Current assets: Cash $ 11,549,990 $ 10,808,505 Accounts receivable (note 3) 2,237, ,042 13,787,905 11,698,547 Investments (note 4) 2,206,044 2,206,044 Liabilities and Net Assets $ 15,993,949 $ 13,904,591 Current liabilities: Accounts payable and accrued liabilities (note 2) $ 219,328 $ 193,873 Funds committed for charitable donations 10,872,404 3,378,077 11,091,732 3,571,950 Net assets: Unrestricted 2,843,208 6,091,812 Internally restricted (note 6) 1,170,971 2,302,317 Restricted 888,038 1,938,512 4,902,217 10,332,641 $ 15,993,949 $ 13,904,591 See accompanying notes to financial statements. On behalf of the Board: Director Director 1

5 Statement of Operations, with comparative information for Unrestricted Restricted Total Total Revenue: Donations: National events and promotions, gross revenue (note 5) $ 3,013,229 $ $ 3,013,229 $ 2,913,835 Corporate donation (note 2) 2,000,000 2,000,000 2,000,000 Regional income 676,483 10,962,138 11,638,621 12,123,435 Interest 131, ,028 97,581 5,820,740 10,962,138 16,782,878 17,134,851 Expenses: Charitable donations (note 8) 1,550,000 19,126,866 20,676,866 14,709,633 Administration 925, , ,931 Fundraising - national events (note 5) 480, , ,777 Marketing 130, , ,780 3,086,436 19,126,866 22,213,302 15,881,121 Excess (deficiency) of revenue over expenses $ 2,734,304 $ (8,164,728) $ (5,430,424) $ 1,253,730 See accompanying notes to financial statements. 2

6 Statement of Changes in Net Assets, with comparative information for Internally Unrestricted restricted Restricted Total Total (note 6) Net assets, beginning of year $ 6,091,812 $ 2,302,317 $ 1,938,512 $ 10,332,641 $ 9,078,911 Excess (deficiency) of revenue over expenses 2,734,304 (8,164,728) (5,430,424) 1,253,730 Interfund transfers (note 6) (5,982,908) (1,131,346) 7,114,254 Net assets, end of year $ 2,843,208 $ 1,170,971 $ 888,038 $ 4,902,217 $ 10,332,641 See accompanying notes to financial statements. 3

7 Statement of Cash Flows, with comparative information for 2016 Cash provided by (used in): Operating activities: Excess (deficiency) of revenue over expenses $ (5,430,424) $ 1,253,730 Change in non-cash operating working capital 6,171,909 (782,642) Increase in cash 741, ,088 Cash, beginning of year 10,808,505 10,337,417 Cash, end of year $ 11,549,990 $ 10,808,505 See accompanying notes to financial statements. 4

8 Notes to Financial Statements President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président (the "Organization") is a charity incorporated without share capital. The Organization was previously incorporated under Part II of the Canada Corporations Act on April 10, 2000 and was continued under the Canada Not-for-profit Corporations Act on September 29, The Organization is committed to helping Canadian children live life well with a focus on children with disabilities and/or lack of access to proper nutrition. The Organization is a registered charity under the Income Tax Act (Canada) and, accordingly, is exempt from income taxes, provided certain requirements of the Income Tax Act (Canada) are met. 1. Significant accounting policies: The financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the Chartered Professional Accountants of Canada Handbook. (a) Fund accounting: (i) Unrestricted fund: The purpose of the unrestricted fund is to record the day-to-day operations of the Organization, including the receipt and use of donations and interest with no external restrictions. (ii) Restricted fund: The Organization collects donations from four Canadian regions: Ontario, Western, Québec and Atlantic. Specific fundraising events stipulate that funds collected in these regions will be used for the benefit of children in these regions and have been recorded as restricted funds. (b) Revenue recognition: The Organization follows the restricted fund method of accounting for contributions. 5

9 Notes to Financial Statements (continued) 1. Significant accounting policies (continued): Unrestricted contributions are recognized as revenue in the unrestricted fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Restricted contributions are recognized as revenue of the appropriate restricted fund when received. (c) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Equity instruments that are quoted in an active market are subsequently measured at fair value. All other financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carry the instruments at fair value. The Organization has not elected to carry any such financial instruments at fair value. (d) Donated goods and services: The Organization receives donated goods that are used in fundraising events. The fair value of these goods has not been recognized in the financial statements as it is not determinable. A substantial number of volunteers contribute a significant amount of their time each year. Because of the difficulty of determining the fair value, contributed services are not recognized in the financial statements. Accounting and administrative time is donated by Loblaw Companies Limited ("Loblaw"). This donation of salary has been included in the financial statements, on a cost recovery basis. 6

10 Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (e) Use of estimates: The preparation of financial statements 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 revenue and expenses during the year. Actual results could differ from those estimates. 2. Loblaw Companies Limited: Loblaw made a corporate donation of $2,000,000 ( $2,000,000), which is recognized in the financial statements, to fund the cost of all administrative and some operational expenses of the Organization. Loblaw also pays certain administrative expenses on behalf of the Organization and included in accrued liabilities are $151,790 ( $155,408). 3. Accounts receivable: Accounts receivable include $2,039,868 ( $705,734) of pledges receivable, the majority of which has been received subsequent to year end. 4. Investments: Investments consist of cashable escalating rate Guaranteed Investment Certificates ("GICs") with a three-year term, maturing on May 22, 2018 and annual interest rates of 1.15%, 1.40% and 1.65% ( %, 1.40% and 1.65%), respectively. 5. Donations: The Organization holds several annual national fundraising events and promotions. The contributions from national events are recorded as unrestricted funds and the net proceeds are allocated to the various regions. Proceeds from national promotions are generated from sales in their respective regions and are recorded as restricted funds. 7

11 Notes to Financial Statements (continued) 5. Donations (continued): The financial results of these events were as follows: Revenue Expenses Net Net National events: Bowlerama $ 1,080,761 $ 54,982 $ 1,025,779 $ 1,011,868 Golf tournament 1,932, ,393 1,507,075 1,487,190 $ 3,013,229 $ 480,375 $ 2,532,854 $ 2,499, Internally restricted funds: Internally restricted funds represent the transfer of net proceeds allocated from the unrestricted fund to the regions, for the purpose of assisting them in funding charitable commitments. The amount allocated for the year ended December 31, 2017 totalled $5,982,908 ( $2,614,570). Of the available funds, $7,114,254 ( $2,868,757) was transferred to offset regional restricted fund deficiencies. Interfund transfers are summarized as follows: Internally Unrestricted restricted Restricted National events allocation $ (5,982,908) $ 5,982,908 $ Offset regional restricted fund deficiencies (7,114,254) 7,114,254 $ (5,982,908) $ (1,131,346) $ 7,114,254 8

12 Notes to Financial Statements (continued) 7. Regional results: The financial results by region are summarized as follows: 2017 National Ontario Western Québec Atlantic Total Revenue: National events, net $ 2,532,854 $ $ $ $ $ 2,532,854 Other 2,807,511 4,420,429 3,235,813 1,908,599 1,397,297 13,769,649 5,340,365 4,420,429 3,235,813 1,908,599 1,397,297 16,302,503 Expenses: Charitable donations 1,550,000 9,725,756 3,994,509 3,336,802 2,069,799 20,676,866 Other 1,056,061 1,056,061 2,606,061 9,725,756 3,994,509 3,336,802 2,069,799 21,732,927 Excess (deficiency) of revenue over expenses 2,734,304 (5,305,327) (758,696) (1,428,203) (672,502) (5,430,424) Interfund transfer (5,982,908) 4,418, ,745 1,224,949 (3,248,604) (887,113) (418,951) (203,254) (672,502) (5,430,424) Net assets, beginning of year 6,091, ,684 2,044, ,254 1,104,591 10,332,641 Net assets, end of year $ 2,843,208 $ 1,571 $ 1,625,349 $ $ 432,089 $ 4,902,217 Allocated as follows: Unrestricted $ 2,843,208 $ $ $ $ $ 2,843,208 Internally restricted 738, ,089 1,170,971 Restricted 1, , ,038 $ 2,843,208 $ 1,571 $ 1,625,349 $ $ 432,089 $ 4,902,217 9

13 Notes to Financial Statements (continued) 7. Regional results (continued): 2016 National Ontario Western Québec Atlantic Total Revenue: National events, net $ 2,499,058 $ $ $ $ $ 2,499,058 Other 2,712,164 4,662,167 3,063,445 1,940,719 1,842,521 14,221,016 5,211,222 4,662,167 3,063,445 1,940,719 1,842,521 16,720,074 Expenses: Charitable donations 600,000 6,222,539 3,282,728 2,838,771 1,765,595 14,709,633 Other 756, ,711 1,356,711 6,222,539 3,282,728 2,838,771 1,765,595 15,466,344 Excess (deficiency) of revenue over expenses 3,854,511 (1,560,372) (219,283) (898,052) 76,926 1,253,730 Interfund transfer (2,614,570) 1,666, , ,204 1,239, , ,335 (315,848) 76,926 1,253,730 Net assets, beginning of year 4,851, ,308 1,897, ,102 1,027,665 9,078,911 Net assets, end of year $ 6,091,812 $ 888,684 $ 2,044,300 $ 203,254 $ 1,104,591 $ 10,332,641 Allocated as follows: Unrestricted $ 6,091,812 $ $ $ $ $ 6,091,812 Internally restricted 881, , , ,803 2,302,317 Restricted 6,911 1,325, ,788 1,938,512 $ 6,091,812 $ 888,684 $ 2,044,300 $ 203,254 $ 1,104,591 $ 10,332, Related entity: The Organization exercises control over Breakfast for Learning ("BFL"), by virtue of a common Board of Directors. BFL is a registered charity exempt from income taxes and is dedicated to child nutrition programs in Canada. As the national premier sponsor of BFL, the Organization also provided funding of $4,237,200 in In November 2017, the BFL Board of Directors approved a motion for dissolution and therefore the Organization did not provide funding to BFL during the year. The Organization directly funded school nutrition programs for the school year. 10

14 Notes to Financial Statements (continued) 8. Related entity (continued): A financial summary for BFL's year ended June 30 is as follows: Financial position: Assets $ 1,885,863 $ 2,228,753 Liabilities 17, ,308 Net assets $ 1,868,838 $ 1,750,445 Results of operations: Total revenue $ 5,682,684 $ 6,725,797 Total expenses 5,564,291 5,793,507 Excess of revenue over expenses $ 118,393 $ 932,290 Cash provided by (used in): Operating activities: Excess of revenue over expenses $ 118,393 $ 932,290 Change in non-cash operating working capital (425,076) (1,948,274) Cash provided by investing activities 1,669, ,037 Increase (decrease) in cash 1,362,965 (380,947) Cash, beginning of year 491, ,254 Cash, end of year $ 1,854,272 $ 491, Financial risks: In the normal course of business, the Organization manages risks that arise as a result of its use of financial instruments. These risks include market, liquidity and credit risks. Market risk is managed through investments in GICs with Canadian financial institutions. Accounts receivable consist of pledges receivable from suppliers and Loblaw stores. It is management's opinion that the Organization is not exposed to significant interest or credit risks arising from these financial instruments. 11