Consolidated financial statements. United Way of Halifax Region. December 31, 2012

Transcription

1 Consolidated financial statements United Way of Halifax Region

2 Contents Page Independent auditor s report 1 Consolidated statement of revenues and expenses 2 Consolidated balance sheet 3 Consolidated statement of changes in net assets 4 Consolidated statement of cash flows 5 Notes to the consolidated financial statements 6-11

3 Independent auditor s report To the Board of Directors of the United Way of Halifax Region Grant Thornton LLP Suite 1100, Cogswell Tower 2000 Barrington Street Halifax, NS B3J 3K1 T (902) F (902) We have audited the accompanying consolidated financial statements of the United Way of Halifax Region ( the Organization ), which comprise the consolidated balance sheets as at, December 31, 2011 and January 1, 2011, and the consolidated statements of revenue and expenses and changes in fund balances and cash flows for the years ended and December 31, 2011, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated financial statements based on our audits. We conducted our audits 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion. Basis for qualified opinion In common with many not-for-profit organizations, the Organization reports revenue from special events and donations 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 the Organization and we were unable to determine whether any adjustments for unrecorded revenue might be necessary to special events revenue, donations, excess of revenue over expenses, assets and fund balances. Qualified opinion In our opinion, except for the effects of the matter described in the Basis for qualified opinion paragraph, the consolidated financial statements present fairly, in all material respects, the financial position of the Organization as at, December 31, 2011 and January 1, 2011, and its financial performance and its cash flows for the years then ended in accordance with Canadian accounting standards for not-for-profit organizations. Halifax, Canada April 16, 2013 Chartered Accountants Audit Tax Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd

4 Consolidated statement of revenue and expenses Year ended December Fundraising revenue (note 8) Workplace campaign $ 5,155,625 $ 5,882,534 Other fundraising 65,977 78,257 Funds to be transferred to other United Ways 30,361 25,342 Funds transferred from other United Ways 845, ,414 6,097,157 6,466,547 Less: Uncollectible pledges 274, ,821 Net fundraising revenue 5,822,604 6,160,726 Other revenue Other income 22,033 2,022 Interest on investments and deposits 18,797 19,469 5,863,434 6,182,217 Expenses Fundraising expenses 1,040,621 1,041,635 Net revenue available for programs 4,822,813 5,140,582 Support to the community Community investment 2,348,100 2,280,600 Designations 1,440,035 1,737,472 Community impact 742, ,798 Action for Neighbourhood Change (note 7) 207, ,602 Allocation to United Way of Canada 38,781 36,642 Designations to other United Ways 30,361 25, contribution 34,000 20,307 Youth engagement - 8,071 Small grants 10,654 2,950 4,852,040 4,870,784 (29,227) 269,798 Tomorrow Fund revenues (expenses) Memorial 375 2,365 Bequest and organizations 27,397 19,278 Interest and dividends 73,420 54,127 Realized gain on investments 15,433 - Unrealized investment gains (losses) 51,082 (41,275) Rainbow Haven transition grants (50,000) (74,000) 117,707 (39,505) Excess of revenue over expenses 88,480 $ 230,293 See accompanying notes to the consolidated financial statements 2

5 Consolidated balance sheet December 31 December 31 January 1 Year ended (note 3) General Capital Tomorrow Fund Asset Fund Fund Total Total Total Assets Current Cash and cash equivalents $ 510,588 $ - $ 174,332 $ 684,920 $ 572,053 $ 1,151,137 Short term investments, at market value 1,504, ,504,398 1,386,264 1,664,921 Pledges receivable (note 4) 4,268, ,268,689 4,376,886 4,597,786 Receivables 4, ,934 37,303 73,315 Accrued investment income ,605 11,605 8,402 6,562 Receivable from 211 Nova Scotia ,564 - Receivable from Tomorrow Fund 72, ,930 67,309 - Prepaids 38,332 38,332 6,812 20,910 6,399, ,937 6,585,808 6,466,593 7,514,631 Capital assets (note 5) - 166, ,732 60,518 53,810 Long term investments, at market value - - 2,226,717 2,226,717 2,222,878 1,313,169 $ 6,399,871 $ 166,732 $ 2,412,654 $ 8,979,257 $ 8,749,989 $ 8,881,610 Liabilities Current Payables and accruals (note 6) $ 785,299 $ - $ - $ 785,299 $ 767,641 $ 678,622 Funded agencies - current campaign 2,348, ,348,100 2,280,600 2,322,760 Payable to General Fund ,930 72,930 67,309 - Deferred 211 initiative ,000 Deferred campaign revenue 1,577,575 1,577,575 1,527,566 1,738,648 4,710,974-72,930 4,783,904 4,643,116 5,005,030 Net assets (note 2) General Fund 1,106, ,106,636 1,199, ,123 Reserve for future operations 582, , , ,887 Capital Asset Fund 166, ,732 60,518 53,810 Tomorrow Fund - - 2,339,724 2,339,724 2,230,877 2,280,760 1,688, ,732 2,339,724 4,195,353 4,106,873 3,876,580 $ 6,399,871 $ 166,732 $ 2,412,654 $ 8,979,257 $ 8,749,989 $ 8,881,610 Commitments (note 9) On Behalf of the Board Director Director See accompanying notes to the consolidated financial statements 3

6 Consolidated statement of changes in net assets Year ended December General Fund Balance, beginning of year $ 1,199,405 $ 955,123 Excess of revenue over expenses 88, ,293 Transfers (to) from Capital Asset Fund Capital purchases (125,918) (23,218) Depreciation 19,704 16,510 Tomorrow Fund, current year activity (117,707) 39,505 Transfer from Tomorrow Fund 8,860 10,378 Transfer from (to) reserve for future operations 33,812 (29,186) Balance, end of year $ 1,106,636 $ 1,199,405 Reserve for future operations Balance, beginning of year $ 616,073 $ 586,887 Transfer (to) from General Fund (33,812) 29,186 Balance, end of year $ 582,261 $ 616,073 Capital Asset Fund Balance, beginning of year $ 60,518 $ 53,810 Transfer from (to) General Fund Capital purchases 125,918 23,218 Depreciation (19,704) (16,510) Balance, end of year $ 166,732 $ 60,518 Tomorrow Fund Balance, beginning of year $ 2,230,877 $ 2,280,760 Increase (decrease) during the year Comprised of Transfer to General Fund (8,860) (10,378) Bequests and organizations 27,397 19,278 Memorial 375 2,365 Investment activity 139,935 12,852 Rainbow Haven transition grants (50,000) (74,000) Balance, end of year $ 2,339,724 $ 2,230,877 See accompanying notes to the consolidated financial statements 4

7 Consolidated statement of cash flows Year ended December Increase (decrease) in cash and cash equivalents Operating Excess of revenue over expenses $ 88,480 $ 230,293 Depreciation 19,704 16, , ,803 Change in non-cash operating working Pledges receivable 108, ,900 Receivables 32,369 36,012 Accrued investment income (3,203) (1,840) Receivable from 211 Nova Scotia 11,564 (11,564) Prepaids (31,520) 14,098 Payables and accruals 17,658 89,019 Funded agencies payable 67,500 (42,160) Deferred 211 initiative - (265,000) Deferred campaign revenue 50,009 (211,082) 360,758 75,186 Investing Capital Asset Fund Purchase of capital assets (125,918) (23,218) General Fund Purchase of investments, net of proceeds on sale (118,134) 278,657 Tomorrow Fund Purchase of investments, net of proceeds on sale (3,839) (909,709) (247,891) (654,270) Net increase (decrease) in cash and cash equivalents 112,867 (579,084) Cash and cash equivalents, beginning of year 572,053 1,151,137 Cash and cash equivalents, end of year $ 684,920 $ 572,053 See accompanying notes to the consolidated financial statements 5

8 Notes to the consolidated financial statements 1. Nature of operations The mission of the United Way of Halifax Region is to bring people and organizations together to build vibrant neighbourhoods and strengthen our community. The United Way of Halifax Region is a not-for-profit organization and is a registered charity under the Income Tax Act. 2. Summary of significant accounting policies Basis of presentation These consolidated financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations ( ASNPO ). Basis of consolidation These consolidated financial statements include the financial results of the United Way of Halifax Region and the United Way of Halifax Region Tomorrow Fund, which is controlled by the United Way of Halifax Region. Fund accounting The Organization uses fund accounting and accordingly, the balance sheet is segregated between the Funds. The General Fund accounts for the Organization s fundraising activities and other unrestricted contributions. This fund reports the monies which are available to provide support to the community. The Reserve for future operations represents amounts transferred under a board approved policy from the General Fund to be used by the Organization to fund future operations. The policy has been set that the reserve fund balance shall not exceed 10% of the current year s net fundraising revenue. The Capital Asset Fund reports the net investment in capital assets. The United Way of Halifax Region Tomorrow Fund is a separate registered charity under the Income Tax Act. The fund receives gifts, bequests and memorials as designated by benefactors. The United Way of Halifax Region Tomorrow Fund is governed by its own Board of Trustees, as appointed by the United Way of Halifax Region Board. Use of estimates The preparation of the consolidated financial statements in conformity with ASNPO requires the Organization s management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenue and expenditures during the year. Certain of these estimates require subjective judgments by management that may be uncertain. These items include an allowance for losses on pledges receivable and on deferred campaign revenue, fair value of investments and useful lives of capital assets. Actual results could differ from those reported. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and balances with banks in the General and Tomorrow Funds. 6

9 Notes to the consolidated financial statements 2. Summary of significant accounting policies (continued) Revenue recognition The Organization follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue of the appropriate fund in the year in which the related expenses are incurred. Restricted contributions for the purchase of capital assets that will be amortized are deferred and recognized as revenue at the same rate of amortization as the related acquired capital assets. Restricted contributions for the purchase of capital assets that will not be amortized are recognized as direct increases in net assets in the Capital Fund. Unrestricted contributions are recognized as revenue of the appropriate fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. All other revenues are recognized when received or receivable. Net investment income that is not externally restricted is recognized as it is earned in the statement of revenue and expenses. Net investment income that is externally restricted and must be added to the resources held for endowment are recognized as direct increases or decreases in net assets in the Tomorrow Fund. Other externally restricted net investment income is recognized in the statement of revenue and expenses, in deferred contributions or in net assets, depending on the nature of restrictions imposed. Pledges receivable Pledges receivable are recorded at their net realizable value when the amount to be received can be reasonably estimated and collection is reasonably assured. Capital assets Purchased capital assets are recorded at cost. Contributed capital assets are recorded at fair value at the date of contribution. Depreciation is provided on the straight-line basis over their estimated useful lives as follows (prorated in the year of acquisition): Computer software and hardware Furniture and fixtures Leasehold improvements 2, 3 and 4 years 3, 4 and 5 years 10 years When a capital asset no longer has any long-term service potential to the organization, the excess of its net carrying amount over any residual value is recognized as an expense in the statement of operations. Any write-downs recognized are not reversed. Investments Long term and short term investments are recorded at market value. 7

10 Notes to the consolidated financial statements 2. Summary of significant accounting policies (continued) Operations Expenses include costs directly incurred by departments, as well as allocations of certain overhead expenses including salaries, occupancy, insurance, depreciation, postage, etc. at the following rates: January Community impact 46% 39% 39% Fundraising expenses 54% 61% 61% 100% 100% 100% The allocations are determined based on management s best estimate of the employees time spent in the above areas weighted as an allocation of individual employee salary. Total Fundraising expenses reported in the consolidated statement of revenues and expenses of $1,040,621 ( $1,041,635) are reported after allocation of $848,541 ( $875,400). Total Community Impact expenses reported in the consolidated statement of revenues and expenses of $742,740 ( $571,798) are reported after allocation of $722,831 ( $559,682). Donated materials and services Donated materials and services are recognized at their fair value in the financial statements when the amount can be reasonably estimated and when the materials and services are used in the normal course of the Organization's operations and would otherwise have been purchased. Donated materials and services at an estimated fair value of $Nil were received by the Organization during the year to distribute to various agencies ( $55,750). Financial instruments Initial measurement The Organization's financial instruments are measured at fair value when issued or acquired. For financial instruments subsequently measured at cost or amortized cost, fair value is adjusted by the amount of the related financing fees and transaction costs. Transaction costs and financing fees relating to financial instruments that are measured subsequently at fair value are recognized in operations in the year in which they are incurred. Subsequent measurement At each reporting date, the Organization measures its financial assets and liabilities at cost or amortized cost (less impairment in the case of financial assets), except for equities quoted in an active market, which must be measured at fair value. All changes in fair value of the Organization s investments in equities quoted in an active market are recorded in the consolidated statement of revenue and expenses. Included in excess of revenue over expenses at is a market adjustment of $51,082 (2011 ($41,275)). The Organization uses the effective interest rate method to amortize any premiums, discounts, transaction fees and financing fees to the consolidated statement of revenues and expenses. The financial instruments measured at amortized cost are cash and cash equivalents, receivables and payables and accruals. 8

11 Notes to the consolidated financial statements 2. Summary of significant accounting policies (continued) Financial instruments (continued) Subsequent measurement (continued) For financial assets measured at cost or amortized cost, the Organization regularly assesses whether there are any indications of impairment. If there is an indication of impairment, and the Organization determines that there is a significant adverse change in the expected timing or amount of future cash flows from the financial asset, it recognizes an impairment loss in the statement of operations. Any reversals of previously recognized impairment losses are recognized in operations in the year the reversal occurs. Credit risk The United Way of Halifax Region is exposed to credit risk that arises from pledges receivable. Credit risk arises from the possibility that the contributors to the United Way of Halifax Region will be unable to fulfil their obligations. Management closely evaluates the collectability of its pledges receivable and maintains provisions for potential pledge losses, which are assessed on a regular basis. 3. First-time adoption These financial statements are the Organization's first financial statements prepared using ASNPO. The date of transition to ASNPO is January 1, The accounting policies presented in note 2 to the financial statements were used to prepare the financial statements for the year ended, the comparative information and the opening statement of balance sheet as at the date of transition. Impact of transition on net assets as at January 1, 2011 The impact of the transition to the new accounting standards on the Organization's net assets at January 1, 2011, the date of transition, is not significant. Reconciliation of excess of revenues over expenses as at December 31, 2011 The excess of revenues over expenses as at December 31, 2011 determined using the new accounting standards is approximately equivalent to that determined using the previous accounting standards (pre-changeover accounting standards). Statement of cash flows Accounting standards regarding cash flows included in the new accounting standards are similar to those included in the previous accounting standards. The Organization has not made any major adjustment to the statement of cash flows. Exceptions relating to first-time adoption Section 1501 First-time adoption by not-for-profit organizations, contains exemptions to full retrospective application which the Organization may use upon transition. The Organization did not apply any optional exemptions. 9

12 Notes to the consolidated financial statements 4. Pledges receivable January Campaign $ 4,224,319 $ - $ Campaign 323,486 4,262, Campaign - 393,463 4,286, Campaign ,895 Less: Allowance for loss on pledges (279,116) (279,116) (279,116) $ 4,268,689 $ 4,376,886 $ 4,597, Capital assets January Accumulated Net Net Net Cost Depreciation Book Value Book Value Book Value Computer hardware and software $ 303,576 $ 172,647 $ 130,929 $ 23,933 $ 13,976 Furniture and fixtures 64,998 62,001 2,997 2,913 3,367 Leasehold improvements 69,691 36,885 32,806 33,672 36,467 $ 438,265 $ 271,533 $ 166,732 $ 60,518 $ 53, Payables and accruals January Trade payables $ 26,857 $ 52,600 $ 31,795 Community investment prior campaign 758, , ,827 $ 785,299 $ 767,641 $ 678, Action for Neighbourhood Change Community fund allocation $ 125,042 $ 133,370 Gifts to Action 82,327 54,232 $ 207,369 $ 187,602 10

13 Notes to the consolidated financial statements 8. Fundraising revenue The following is a reconciliation of estimated campaign results to audited gross fundraising revenue: Estimated campaign results announced to the public $ 6,104,138 $ 6,102,657 Less: estimated campaign pledges not received prior to closing financial statements (433,587) (472,977) Less: deferred designated pledges (1,673,134) (1,623,125) Add: prior year deferred designated pledges 1,623,125 1,834,207 Add: prior year campaign pledges recognized in current financial year 472, ,419 Change in estimated prior year campaign results 3,638 3,366 Gross fundraising revenue financial statements $ 6,097,157 $ 6,466, Commitments The United Way of Halifax Region leases its premises under a long term operating lease which expires on April 30, The annual rent consists of a minimum amount plus a proportionate share of certain operating costs determined on an annual basis. The Organization entered into a lease for equipment which expires on June 30, Minimum rent/lease payable for the premises in aggregate for each of the next five years is as follows: Property Equipment 2013 $ 84,175 $ 4, ,470 4, ,060 4, ,355 4, ,945 4, Defined contribution pension plan The United Way of Halifax Region operates a defined contribution pension plan for its employees. The assets of the plan are held separately from those of the Organization in an independent fund administered by Desjardins Financial Security. The Organization matches the annual contributions of employees, which may be up to 5% of each employee s regular earnings. Pension expense attributable to the Organization s pension plan for the current year is $42,908 ( $39,755). 11. Credit facilities The United Way of Halifax Region has a financing arrangement with a financial institution which provides an available unsecured operating line of credit totalling $200,000, bearing interest at Royal Bank prime rate plus 1.3%, all of which is unused at and December 31,