Financial Statements. Bayview Glen Church of the Christian and Missionary Alliance in Canada. June 30, 2017

Transcription

1 Financial Statements Bayview Glen Church of the Christian and Missionary

2 Contents Page Independent Auditor s Report 1-2 Statement of Operations and Changes in Fund Balances 3 Statement of Financial Position 4 Statement of Cash Flows

3 Independent Auditor s Report Grant Thornton LLP Suite Allstate Parkway Markham, ON L3R 5B4 T F E Markham@ca.gt.com To the Members of We have audited the accompanying financial statements of Bayview Glen Church of the Christian and Missionary, which comprise the statement of financial position as at June 30, 2017 and the statements of operations and changes in fund balances 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. 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 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. Audit Tax Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd 1

4 We believe that the audit evidence we have obtained in our audit 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 as at June 30, 2017 and its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Markham, Canada September 5, 2017 Chartered Professional Accountants Licensed Public Accountants Audit Tax Advisory Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd 2

5 Statement of Operations and Changes in Fund Balances Unrestricted - Church Internally Externally Year ended June 30 Ministries Restricted Restricted Total Total Revenue Donations and sundry $ 1,630,569 $ - $ 312,096 $ 1,942,665 $ 1,908,711 Rental and other income 60, ,251 47,428 Designated donations 33,852-61,361 95,213 80,401 Missions Christian and Missionary Alliance 15% ,370 38,370 42,804 Investment income 3, ,257 3,454 1,727, ,827 2,139,756 2,082,798 Expenditures Salaries, benefits and related costs 1,009, ,009, ,962 Christian and Missionary Alliance Foreign , , ,179 Home , , ,981 Property management 247,502 28,899 8, , ,493 Ministry costs 242, , ,753 Administration and office 178, , ,693 Benevolent ,437 79,437 69,281 Other 33, ,832 28,104 Missions special (Note 9) - 5,000 12,815 17,815 18,026 1,711,957 33, ,570 2,137,426 2,061,472 Excess (deficiency) of revenue over expenditures 15,972 (33,899) 20,257 2,330 21,326 Fund balances, beginning of year 176, , , , ,564 Interfund transfers Purchase of property and equipment (Note 7) (9,359) (166,786) - (176,145) (116,881) Building renewal transfer (100,000) 100, Transfer of prior year surplus to internally restricted (22,981) 22, Estate transfer (20,172) 20, (152,512) (23,633) - (176,145) (116,881) Fund balances, end of year $ 39,870 $ 113,053 $ 244,341 $ 397,264 $ 571,079 See accompanying notes to the financial statements. 3

6 Statement of Financial Position As at June Assets Current Cash and short-term investments (Note 4) Unrestricted $ 17,800 $ 37,528 Restricted 327, ,669 Accounts receivable 36,159 32,230 Prepaid expenses 10,116 24, , ,303 Long-term Long-term investments (Note 4) 113, ,866 Property and equipment (Note 5) 3,168,587 3,237,323 $ 3,673,362 $ 3,949,492 Liabilities Current Accounts payable and accrued liabilities (Note 6) $ 91,958 $ 118,375 Deferred revenue 15,553 22, , ,090 Fund balances Invested in property and equipment (Note 7) 3,168,587 3,237,323 Unrestricted Church Ministries 39, ,410 Internally restricted (Note 8) 113, ,585 Externally restricted (Note 8) 244, ,084 3,565,851 3,808,402 $ 3,673,362 $ 3,949,492 Commitments (Note 10) On behalf of the Board of Elders John Havercroft Elder Ravi David Elder See accompanying notes to the financial statements. 4

7 Statement of Cash Flows Year ended June Increase (decrease) in cash and short-term investments Operating Excess of revenue over expenditures $ 2,330 $ 21,326 Change in non-cash working capital items Accounts receivable (3,929) 5,432 Prepaid expenses 14,760 (16,880) Accounts payable and accrued liabilities (26,417) (2,630) Deferred revenue (7,162) 1,590 (20,418) 8,838 Investing Purchase of property and equipment (Note 7) (176,145) (116,811) Maturity (purchase) of long-term investments 109,389 (222,866) (66,756) (339,677) Decrease in cash and short-term investments during the year (87,174) (330,839) Cash and short-term investments (Note 4) Beginning of year 432, ,036 End of year $ 345,023 $ 432,197 See accompanying notes to the financial statements. 5

8 1. Purpose of the Organization (the Church ) was incorporated in the Province of Ontario in The mission of the Church is to glorify God through teaching, fellowship, worship, prayer and evangelism. For Canadian income tax purposes, the Church is qualified as a registered charity and is exempt from income taxes under the Income Tax Act. 2. Summary of significant accounting policies These financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations (ASNPO). ASNPO requires entities to select policies appropriate for their circumstances from policies provided in these standards. The significant accounting policies selected by the Church and applied in these financial statements are summarized below. Use of estimates Management reviews the carrying amounts of items in the financial statements at each statement of financial position date to assess the need for revision or any possibility of impairment. Certain items in the preparation of these financial statements require management s best estimate. Management determines these estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. These estimates are reviewed periodically and adjustments are made to the excess or deficiency of revenue over expenditures as appropriate in the year they become known. Fund accounting The accounts are maintained in accordance with the principles of fund accounting, whereby fund balances of the Church are classified for accounting and reporting purposes into funds to be used according to the directions of the donor or as determined by the Church. Unrestricted fund The Unrestricted - Church Ministries Fund reflects all general programs, activities and capital projects of less than $10,000, other than those activities listed below. 6

9 2. Summary of significant accounting policies (continued) Fund accounting (continued) Internally restricted funds The following internally restricted funds are designated for restriction by the Board of Elders (the Board ): The Building Renewal Fund was established to fund maintenance projects for the existing building. The Estate Fund was established to hold legacies received awaiting the expenditure determination. The Summer Camps Fund reflects the activities of the day camps that operate throughout the summer. Externally restricted funds The following externally restricted funds are designated for restriction by donors: The Benevolent Fund was established to record funds to support special needs of individuals and other charitable organizations assisting needy individuals. The Church Plant Fund was established to record funds to support new church planting initiatives. The Missions Fund was established to record funds to support both overseas and home missions. The Building Fund was established to record funds to hold and expend monies received for capital projects in excess of $10,000. Revenue recognition The Church follows the restricted fund method of accounting for contributions. Externally restricted 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. Unrestricted contributions are recognized as revenue of the Unrestricted - Church Ministries Fund in the year received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Rental income is recognized when the Church s facilities are used by outside organizations or noncongregants. Camp registration fees are recognized when these programs are run. Investment income is recognized as revenue of the Unrestricted - Church Ministries Fund on an accrual basis when earned. Deferred revenue reflects rental and other income collected related to fiscal

10 2. Summary of significant accounting policies (continued) Property and equipment Property and equipment purchases are capitalized and recorded at cost. Amortization is provided on a straight-line basis over their estimated useful life as follows: Buildings Paving Furniture and fixtures 40 years 10 years 10 years The Church tests for impairment whenever events or changes in circumstances indicate that the carrying amount of the property and equipment may not be recoverable. When a test for impairment indicates that the carrying amount of an asset is not recoverable, an impairment loss is recognized to the extent the carrying value exceeds its fair value. Contributed services Achievement of the mission of the Church is dependent upon the many hours generously contributed by its congregants. Because of the difficulty in determining their fair value, contributed services are not recognized in these financial statements. Financial instruments The Church considers any contract creating a financial asset, liability or equity instrument as a financial instrument. The Church s financial instruments are comprised of cash and short-term investments, accounts receivable, long-term investments, and accounts payable. Financial assets and liabilities obtained in arm s length transactions are initially recorded at their fair value and financial assets and liabilities obtained in related party transactions are initially measured at their exchange amount. The Church subsequently measures all of its financial assets and liabilities at amortized cost, except for cash and investments, which are measured at fair value. 3. Objectives, policies and processes for managing capital The Church's capital is comprised of the net amounts invested in property and equipment, externally restricted, internally restricted, and unrestricted funds. The Church invests in property and equipment in order to provide worship and devotional programming that enhances the experience of all participants. The Board, through the Finance Committee, is responsible for this investment, and defines the policies to be followed in ensuring the smooth functioning of the building and its maintenance. 8

11 3. Objectives, policies and processes for managing capital (continued) The Finance Committee has delegated the role of maintaining a multi-year property and equipment plan to the Executive Director of Ministry Operations who works closely with the Facility Manager as well as with the Property and Facilities Committee. This plan is periodically revised as required to comply with the objectives of the Church's strategic plan. With staff assistance, the Property and Facilities Committee develop the annual property budget which it submits to the Board for examination. The Board authorizes the funds for the budget, with revisions as required, and the budget is executed by the property staff, who report on progress to the committees. In fiscal 2017, the Church updated a number of areas of the Church including audio visual equipment, the gym humidifier and the sidewalk. These projects were paid out of the Building Renewal Fund and the Unrestricted Church Ministries Fund. The total cost of the projects during fiscal 2017 was $176,145. The Board s objective is to maintain an unrestricted fund balance sufficient to meet both the annual working capital requirements and the annual maintenance of property and equipment. The Executive Director of Ministry Operations in conjunction with staff prepare, and the Finance Committee reviews, the annual budget and cash flow forecast (which includes property requirements), which projects the unrestricted fund balance required. After the budget is approved by the Board and congregation, the Executive Director of Ministry Operations monitors the actual results against the forecast and notifies the Treasurer and the Finance Committee, who in turn inform the Board, when changes to plans are required. Externally restricted funds are maintained in accordance with the terms of their donors. The objectives of these funds are described in Note 2. Internally restricted funds are set aside by Board resolution to provide for short-term and discretionary missionary spending needs. The Board assigns a Missions Committee with the responsibility of carrying out the objectives of these funds. The Treasurer monitors the status of these funds, and those responsible report to the Board on their usage. Where the funds are not required in the short-term, the Treasurer invests their balances in accordance with Board policy, which allows that they be held in short-term, low risk and highly liquid financial instruments. 9

12 4. Cash and investments Unrestricted Cash $ (181,959) $ (52,304) Short-term investments 199,759 89,832 17,800 37,528 Restricted Cash 327, ,669 $ 345,023 $ 432,197 Long-term investments $ 113,477 $ 222,866 Short-term investments are comprised of easily liquated Canadian Imperial Bank of Commerce (CIBC) debt securities maturing between August 8, 2017 and April 6, 2018 (2016 April 6, 2017) and earning interest between 0.55% and 1.30% ( %). Long-term investments are comprised of CIBC debt securities maturing April 5, 2019 (2016 between August 8, 2017 and April 5, 2019) earning interest of 1.00% (2016 between 0.55% and 1.00%). 5. Property and equipment Accumulated Net Book Net Book Cost Amortization Value Value Buildings $ 4,570,423 $ (3,287,960) $ 1,282,463 $ 1,396,724 Land 1,013,278-1,013,278 1,013,278 Paving 452,861 (182,616) 270, ,531 Furniture and fixtures 853,339 (250,738) 602, ,790 $ 6,889,901 $ (3,721,314) $ 3,168,587 $ 3,237, Accounts payable and accrued liabilities Total government remittances payable, including harmonized sales tax payable and other government remittances, is $2,592 ( $2,592). 10

13 7. Invested in property and equipment Balance, beginning of year $ 3,237,323 $ 3,347,778 Amortization (244,881) (227,266) Purchases funded from Unrestricted and Building Renewal Fund 176, ,811 Balance, end of year $ 3,168,587 $ 3,237, Restricted funds 2016 Revenue Expenditures Transfers 2017 Building Renewal $ 160,585 $ - $ 33,899 $ (43,805) $ 82,881 Estate 10, ,172 $ 30,172 Internally restricted funds $ 170,585 $ - $ 33,899 $ (23,633) $ 113,053 Benevolent $ 47,778 $ 90,442 $ 79,437 $ - $ 58,783 Missions 63, , ,113-67,562 Building 112,549 13,468 8, ,996 Externally restricted funds $ 224,084 $ 411,828 $ 391,571 $ - $ 244,341 11

14 9. Missions special The missions - special expenditures include approved special mission projects and appeals. 10. Commitments The Church is committed under an operating lease for a photocopier extending to fiscal Future minimum annual payments required over the next three years are as follows: 2018 $ 13, , , Financial instruments Transactions in financial instruments may result in an entity assuming or transferring to another party one or more of the financial risks described below. The required disclosures provide information that assists users of the financial statements in assessing the extent of risk related to financial instruments. There were no changes in risk from the prior year. Credit risk Credit risk is the risk of financial loss occurring as a result of a counter party to a financial instrument failing to discharge an obligation or commitment that it has entered into with the Church. The Church s main credit risks relate to its accounts receivable. The Church reduces its exposure to credit risk by creating an allowance for doubtful accounts when appropriate. As at, the allowance for doubtful accounts is $Nil ( $Nil). It is management s opinion that the Church is not exposed to significant credit risk arising from its financial instruments. Liquidity risk Liquidity risk is the risk that the Church will encounter difficulty in raising funds to meet commitments associated to its financial liabilities. The Church is exposed to liquidity risk mainly in respect to its accounts payable. The Church manages its liquidity risk by forecasting cash flows from operations, investing and financing activities to ensure that it has sufficient funds available to meet current and foreseeable financial obligations. It is management s opinion that the Church is not exposed to significant liquidity risk arising from its financial instruments. 12

15 12. Financial instruments (continued) Interest rate risk Interest rate price risk is the risk that the fair value of an interest bearing financial instrument will fluctuate due to changes in market interest rates. The Church s exposure to interest rate price risk is limited to its fixed interest bearing investments. It is management s opinion that the Church is not exposed to significant interest rate price risks arising from its financial instruments. 13