SCHIZOPHRENIA SOCIETY OF CANADA SOCIÉTÉ CANADIENNE DE LA SCHIZOPHRÉNIE. Non-Consolidated Financial Statements For the year ended March 31, 2012

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1 SOCIÉTÉ CANADIENNE DE LA SCHIZOPHRÉNIE Non-Consolidated Financial Statements

2 Non-Consolidated Financial Statements Contents Independent Auditor's Report 2 Non-Consolidated Financial Statements Statement of Financial Position 4 Statement of Operations and Changes in Net Assets 5 Statement of Cash Flows 6 Summary of Significant Accounting Policies 7 Notes to Financial Statements 9

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5 Non-Consolidated Statement of Financial Position March Assets Current Assets Cash and bank $ 426,370 $ 74,691 Accounts receivable (Note 2) 16, ,750 Due from related party (Note 7) 57,174 38,558 Prepaid expenses 4,304 3, , ,552 Investments (Note 3) 24,605 20,658 Capital assets (Note 4) 5,764 7,011 $ 534,912 $ 273,221 Liabilities and Net Assets Current Liabilities Accounts payable and accrued liabilities $ 22,574 $ 67,209 Deferred contributions (Note 5) 4,745 4,745 27,319 71,954 Net Assets Unrestricted 507, ,267 $ 534,912 $ 273,221 Approved on behalf of the Board of Directors: Director Director The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 4

6 Non-Consolidated Statement of Operations and Changes in Net Assets Year ended March Revenue Donations $ 198,805 $ 356,243 Bequests 298,458 2,000 Government grants 136, ,087 Educational grants 50,000 10,392 Administrative cost recovery 5,407 69,074 Membership assessments 5, Miscellaneous 2,916 1,377 Unrealized gain on investments , ,873 Expenditures Public awareness and education 284, ,754 Fundraising 47, ,611 Administration 35,699 49,756 Special projects 23,311 19, , ,974 Excess of revenue over expenditures for the year 306,326 32,899 Net assets, beginning of year 201, ,368 Net assets, end of year $ 507,593 $ 201,267 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 5

7 Non-Consolidated Statement of Cash Flows Year ended March Cash Flows from Operating Activities Excess of revenue over expenditures for year $ 306,326 $ 32,899 Adjustments for items not affecting cash Unrealized gain on investments (97) - Amortization of capital assets 1,247 1, ,476 34,245 Changes in non-cash working capital Accounts receivable 112,055 10,180 Due from related party (18,616) (38,558) Prepaid expenses (751) 16,147 Accounts payable and accrued liabilities (44,635) (66,692) Deferred contributions - (5,000) 355,529 (49,678) Cash Flows from Investing and Financing Activities Purchase of capital assets - (1,788) Purchase of investments (24,850) - Proceeds from disposal of investments 21,000 - (3,850) (1,788) Net increase (decrease) in cash and cash equivalents 351,679 (51,466) Cash and bank, beginning of year 74, ,157 Cash and bank, end of year $ 426,370 $ 74,691 The accompanying summary of significant accounting policies and notes are an integral part of these financial statements. 6

8 Summary of Significant Accounting Policies Basis of Accounting for Controlled Entity The Society has not consolidated the financial statements of its controlled entity, Schizophrenia Society of Canada Foundation - Fondation de société canadienne de la schizophrénie (Foundation). The summary financial statements of the controlled entity are disclosed at Note 7. Capital Assets Purchased capital assets are recorded at cost less accumulated amortization. Contributed capital assets are recorded at fair value at the date of contribution less accumulated amortization. Capital assets are amortized over their estimated useful life using the declining balance method at the following rates: Computer equipment 30% Furniture and fixtures 20% Revenue Recognition The Society follows the deferral method of accounting for contributions, which includes donations and government grants. Operating grants are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in that subsequent period. Unrestricted contributions including donations are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Externally restricted contributions are recognized as revenue in the year in which the related expenses are recognized. Contributed Services Allocation of Expenditures Volunteers contributed many hours per year to assist the organization in carrying out its service delivery activities. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements. Certain administrative expenditures are allocated to programs based on an estimate of the time expended on the program (Note 8). 7

9 Summary of Significant Accounting Policies Financial Instruments The Society classifies its financial instruments as follows, based on the purpose for which the asset was acquired and follows the disclosed accounting policy for each category: Assets/Liability Category Measurement Cash and bank Held for trading Fair value Accounts receivable Loans and receivables Amortized cost Investments Held for trading Fair value Accounts payable and accrued liabilities Other financial liabilities Amortized cost Held for trading items are carried at fair value, with changes in their fair value recognized in the statement of operations. Loans and receivables are carried at amortized cost, using the effective interest rate method, less any provision for impairment. Other financial liabilities are carried at amortized cost, using the effective interest method. All transactions related to financial instruments are recorded on a settlement date basis. Transaction costs are expensed as incurred Use of Estimates New Accounting Pronouncements The preparation of these financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities and revenues and expenses during the reporting period, as well as the disclosure of contingencies at the date of the financial statements. Actual results could differ from those estimates. In December 2010, the Accounting Standards Board and Public Sector Accounting Board (Boards) issued new standards for not-for-profit organizations (NPOs). For private sector NPOs, they have a choice of International Financial Reporting Standards or accounting standards for NPOs. The Boards require NPOs to adopt their respective standards for year ends beginning on or after January 1, Until the date of transition to the new standards, all NPOs will continue to follow the current Canadian Institute of Chartered Accountants Handbook Accounting Part V Pre-Changeover Standards. 8

10 1. Purpose of the Organization Notes to Non-Consolidated Financial Statements The Schizophrenia Society of Canada - Société canadienne de la schizophrénie (Society) is a national organization that provides information and support to families and individuals living and coping with schizophrenia. The Society continues to work towards its mission: to alleviate the suffering caused by schizophrenia and relating mental disorders. The Society is a registered charity for income tax purposes. 2. Accounts Receivable Grant receivable $ 1,636 $ 118,673 Program funding receivable 1,779 - GST and HST recoverable 5,723 10,052 Interest Other 7,255 - $ 16,695 $ 128, Investments Cost Fair Value Cost Fair Value Ontario Savings Bond, 2.15%, due June 2014 $ 10,000 $ 9,755 $ - $ - Royal Bank of Canada GIC, 1.20%, due June ,850 14, Bank of America, 4.36%, sold ,903 20,658 $ 24,850 $ 24,605 $ 20,903 $ 20,658 9

11 Notes to Non-Consolidated Financial Statements 4. Capital Assets Accumulated Accumulated Cost Amortization Cost Amortization Computer equipment $ 4,605 $ 2,368 $ 4,605 $ 1,409 Furniture and fixtures 8,396 4,869 8,396 4,581 $ 13,001 $ 7,237 $ 13,001 $ 5,990 Cost less accumulated amortization $ 5,764 $ 7,011 Amortization of expenses for the year of $1,247 ($1,346 in 2011) has been included in the administration expenditures. 5. Deferred Contributions Balance, beginning of year $ 4,745 $ 9,745 Recognized as revenue during the year - (5,000) Balance, end of year $ 4,745 $ 4, Capital Disclosures The Society considers its capital to comprise its unrestricted net assets. There have been no changes to what the Society considers to be its capital since the previous period. As a not-for-profit entity, the Society's operations are reliant on revenues generated annually. The Society endeavours to manage its unrestricted net assets on a break even basis in the longer term. 10

12 Notes to Non-Consolidated Financial Statements 7. Controlled Entity, Related Party Transactions and Balance Due form Related Party The Foundation is a national foundation that supports research and other activities to alleviate the suffering caused by schizophrenia. The Foundation operates as a separate entity to the Society. The Board of Directors of the Foundation is comprised of five members who must also be Board Members of the Society. As a consequence, the organization controls the strategic operating, investing and financing policies of the Foundation. The Foundation has not been consolidated in the Society's financial statements. Financial statements of the Foundation are available on request. The revenues, expenditures and the financial position of the Foundation as at and for the year ended March 31, 2012 are as follows: Statement of Financial Position Total assets $ 1,419,756 $ 1,344,149 Total liabilities $ 61,954 $ 43,338 Fund Balance 1,357,802 1,300,811 $ 1,419,756 $ 1,344,149 Statement of Operations Revenues $ 76,105 $ 48,703 Expenditures 19,114 85,233 Excess (deficiency) of revenues over expenditures $ 56,991 $ (36,530) Statement of Cash Flows Cash used by operating activities $ 55,267 $ (3,553) Cash provided by investing and financing activities 46,302 (69,969) Net increase (decrease) in cash $ 101,569 $ (73,522) Related Party Transactions During the year, the Society did not charge the Foundation an administration fee. In 2011, the Society charged the Foundation a 2.5% administration fee based on total assets held by the Foundation at the beginning of the fiscal year, which was $33,

13 Notes to Non-Consolidated Financial Statements 7. Controlled Entity, Related Party Transactions and Balance Due form Related Party (continued) A portion of the salary of the Society's Executive Director in the amount of $nil ($30,000 in 2011) was allocated to the Foundation's General Fund and General Research Endowment Fund. In addition, other expenditures totaling $8,001 ($20,968 in 2011) were allocated to the endowment funds of the Foundation by the Society, representing the Foundation's portion of the Society's Board of Directors' expenses, audit and accounting fees and other expenses. The above transactions are in the normal course of operations and are measured at the exchange value, which approximates the arm's length equivalent value for services. Due from Related Party A balance of $57,174 ($38,558 at March 31, 2011) is due from the Foundation to the organization which is non-interest bearing, has no specific terms of repayment and arose in the normal course of operations. 8. Allocated Expenditures General administrative expenses of $169,997 ($232,825 in 2011) have been allocated as follows: Public awareness and education $ 127,498 $ 173,800 Administration 35,699 49,756 Special projects 6,800 9,269 $ 169,997 $ 232, Financial Instrument Risk Management The Society, through its financial assets and liabilities, is exposed to various types of risk in the normal course of operations. The Society's objective in risk management is to optimize the risk return trade-off, within set limits, by applying integrated risk management and control strategies, policies and procedures throughout the Society's activities. The following analysis provides a measurement of those risks at year end. 12

14 Notes to Non-Consolidated Financial Statements 9. Financial Instrument Risk Management (continued) Credit Risk Credit risk is the risk that the Society will incur a loss due to the failure by its debtors to meet their contractual obligations. Financial instruments that potentially subject the Society to significant concentrations of credit risk consist primarily of cash, receivables and investments. The Society is not exposed to significant credit risk as the accounts receivable have typically been paid when due, and investments are diversified. Liquidity Risk Liquidity risk is the risk that the Society will encounter difficulty in meeting financial obligations as they become due, and arises from the Society's management of working capital. The Society's policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due. Interest Rate and Market Risk The Society is exposed to fluctuations in interest rates that could affect the cash flows from investments at the time of maturity and reinvestment of individual instruments. These fluctuations could affect the fair values of financial assets and liabilities, and the Society's ability to fulfill its mandate. The Society does not use derivative financial instruments to manage interest rate risk. Fair Value The net carrying value of cash and bank, accounts receivable, and accounts payable and accrued liabilities approximate their fair values due to the relatively short periods to maturity of these items or because they are receivable or payable on demand. Investments are presented at fair value in the statement of financial position. 13