The Church Society of the Diocese of Quebec. Financial Statements December 31, 2013

Transcription

1 The Church Society of the Diocese of Quebec Financial Statements December 31,

2 April 15, 2014 Independent Auditor's Report To The Church Society of the Diocese of Quebec We have audited the accompanying financial statements of The Church Society of the Diocese of Quebec, which comprise the statement of financial position as at December 31, and the statements of changes in net assets, revenue and expenditure of the Operating Fund and the Capital Assets Fund and cash flows for the year then ended, and the related notes, which comprise 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. Place de la Cité, Tour Cominar, 2640 Laurier Boulevard, Suite 1700, Québec, Quebec, Canada G1V 5C2 Place de la Cité, Tour Cominar, 2640 Laurier Boulevard, Suite 1700, Québec, Quebec, Canada G1V 5C2 T: , F: T: , F: PwC PwC refers refers to to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., PwC refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an an an Ontario Ontario Ontario limited limited limited liability liability liability partnership. partnership. partnership. (1)

3 Basis for qualified opinion In common with many not-for-profit organizations, The Church Society of the Diocese of Quebec derives revenues from donations, 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 The Church Society of the Diocese of Quebec. Therefore, we were not able to determine whether any adjustments might be necessary to charitable gifts revenue, excess of revenue over expenditure (expenditure over revenue) of the Operating Fund and cash flows for the years ended December 31, and, current assets as at December 31, and and net assets as at January 1 and December 31 for both and years. Our audit opinion on the financial statements for the year ended December 31, was modified accordingly because of the possible effects of this limitation in scope. 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 The Church Society of the Diocese of Quebec as at December 31, 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. 1 CPA auditor, CA, public accountancy permit No. A (2)

4 Statement of Financial Position As at December 31, Operating Fund Capital Assets Fund Total Total (restated) (note13) Assets Current assets Accounts receivable, net of an allowance for doubtful accounts of 123,670 (123,719 in ) 151, , ,621 Due from The Synod of the Anglican Church in the Diocese of Quebec, non-interest bearing 72,571-72,571 30,993 Due from The Lord Bishop of Quebec, Corporation Sole, non-interest bearing 29,138-29,138 12,294 Current portion of advances receivable 13,838-13,838 20,398 Prepaid expenses , , , ,010 Marketable investments (note 3) 2,574,474-2,574,474 2,382,871 Defined benefit plan assets (note 10) 190, , ,816 Advances receivable (note 4) 170, , ,894 Capital assets (note 5) - 1,101,977 1,101, ,693 3,202,631 1,101,977 4,304,608 3,780,284 The accompanying notes are an integral part of these financial statements. (3)

5 Statement of Financial Position continued As at December 31, Operating Fund Capital Assets Fund Total Total (restated) (note13) Liabilities and Net Assets Current liabilities Cash indebtedness 31,879-31,879 17,688 Accounts payable (note 6) 43,168-43,168 57,491 Due to The Church Society of the Diocese of Quebec Funds Under Management: Pooled Funds, noninterest bearing ,000 Demand loans (note 7) - 326, , ,352 Current portion of long-term debt (note 9) 575, ,794 36, , , , ,345 Long-term debt (note 9) ,140 Deferred contributions (note 8) - 549, , , , ,659 1,526,500 1,323,673 Net assets Externally unrestricted reserves 4,386-4,386 (85,035) Internally restricted reserves 2,546,855-2,546,855 2,310,944 Externally restricted reserves Capital Assets Fund - 226, , ,153 2,551, ,318 2,778,108 2,456,611 Commitments (note 12) 3,202,631 1,101,977 4,304,608 3,780,284 The accompanying notes are an integral part of these financial statements. (4)

6 Statement of Changes in Net Assets For the year ended December 31, Balance Beginning of year January 1, (restated) (note13) Interfund transfers Excess of revenue over expenditure (expenditure over revenue) Pension plan revaluation (note 10) Balance End of year December 31, Externally unrestricted reserves The Sabbaton Administration Fund (page 6) (85,035) 240,942 (151,521) - 4,386 Internally restricted reserves Mission Funds (page 7) - (53,189) 53, Episcopal & Administration Funds (page 7) - (86,713) 86, Program Funds (page 7) (7,387) (5,131) 12, Pension Funds (page 7) (344,877) - 5,303 (354) (339,928) St. Matthew's (page 7) - (4,134) 4, Gaspé Deanery Council (page 7) - (1,309) 1, East Angus Funds (page 7) - (2,282) 2, Chaplaincy Fund (page 8) - (4,797) 4, Fort Haldimand (page 8) - (1,974) 1, St. Laurent Deanery Council (page 8) - (1,504) 1, Archdeacon of North Shore (page 8) - (1,504) 1, Responsibility Allowances (page 8) - (5,714) 5, Ministry Development Fund (page 8) - (1,077) 1, Pooled Funds (page 10) 2,663,208 (79,399) 302,974-2,886,783 2,310,944 (248,727) 484,992 ( 354) 2,546,855 Externally restricted reserves Miscellaneous Cemetery Fund (page 9) - (1,269) 1, North Shore Deanery Funds (page 9) - (14,363) 14, Life Membership Fund (page 9) - (1,301) 1, Education Fund (page 9) 549 (602) (17,535) 17, Capital Assets Fund (page 10) 230,153 25,320 (29,155) - 226,318 2,456, ,851 ( 354) 2,778,108 The accompanying notes are an integral part of these financial statements. (5)

7 Operating Fund Externally Unrestricted Reserves The Sabbaton Administration Fund Statement of Revenue and Expenditure For the year ended December 31, Revenue Interest on loans 9,545 10,830 Management fees as fund manager of the Pooled Funds 263, ,309 Administrative fees 11,039 11,146 Charitable gifts 50, Membership fees Rental and sundry income 4, , ,975 Expenditure Insurance 11,435 11,771 Interest on loans 21,323 17,188 Interest on credit margin 1,124 - Staff salary and benefits 91, ,239 Episcopal allowance 22,480 20,000 Professional fees 66,319 54,000 Doubtful accounts (48) 71,199 Grant to The Synod of the Anglican Church in the Diocese of Quebec 169, ,000 Grants to parishes 948 2,226 Gift to The Lord Bishop of Quebec, Corporation Sole 15,000 11,000 Gift to Chaplaincy at Bishop's University 17,500 13,986 Gift to parish funds 50,098 - Building and maintenance cost 5,369 3,020 Meeting, postage and administrative costs and sundry expenses 8,251 6,638 Contribution to Jeffery Hale Community Partners 10,000 10, , ,267 Excess of expenditure over revenue for the year (151,521) (255,292) The accompanying notes are an integral part of these financial statements. (6)

8 Operating Fund Internally Restricted Reserves Statement of Revenue and Expenditure For the year ended December 31, Mission Funds Episcopal & Administration Funds Program Funds Pension Funds St. Matthew's Gaspé Deanery Council East Angus Funds Total (forward) Revenue Distributed revenue from Pooled Funds 53,189 88,349 5,131 16,110 4,134 1,309 2, ,504 Contribution from St. Michael's trustees , ,843 53,189 88,349 5,131 17,953 4,134 1,309 2, ,347 Expenditure Disbursements Steering committee - - (7,387) (7,387) Pledged portion of Sabbaton bequest & Dean of Quebec - 1, ,636 Pension expenses , ,650-1,636 (7,387) 12, ,899 Excess of revenue over expenditure for the year 53,189 86,713 12,518 5,303 4,134 1,309 2, ,448 The accompanying notes are an integral part of these financial statements. (7)

9 Operating Fund Internally Restricted Reserves Statement of Revenue and Expenditure continued For the year ended December 31, Total (brought forward) Chaplaincy Fund Fort Haldimand St. Laurent Deanery Council Archdeacon of North Shore Responsibility Allowances Ministry Development Fund Total Total (restated) (note 13) Revenue Distributed revenue from Pooled Funds * 170,504 4,797 1,974 1,504 1,504 5,714 2, , ,857 Contribution from St. Michael's trustees 1, ,843 2, ,347 4,797 1,974 1,504 1,504 5,714 2, , ,258 Expenditure Disbursements ,910 1,910 - Steering committee (7,387) (7,387) 7,537 Pledged portion of Sabbaton bequest & Dean of Quebec 1, ,636 4,462 Pension expense 12, ,650 25,166 6, ,910 8,809 37,165 Excess of revenue over expenditure for the year 165,448 4,797 1,974 1,504 1,504 5,714 1, , ,093 * Includes 1,636 (5,432 in ) directly distributed revenue from Pooled Funds, not from the Internally Restricted Reserves Pooled Funds (page 10). The accompanying notes are an integral part of these financial statements. (8)

10 Operating Fund Externally Restricted Reserves Mission Funds Statement of Revenue and Expenditure For the year ended December 31, Miscellaneous Cemetery Fund North Shore Deanery Funds Life Membership Fund Education Fund Total Total Revenue Distributed revenue from Pooled Funds 1,269 14,363 1,301 2,204 19,137 18,714 Expenditure Disbursements Grants ,000 1,000 1, ,602 1,602 1,620 Excess of revenue over expenditure for the year 1,269 14,363 1, ,535 17,094 The accompanying notes are an integral part of these financial statements. (9)

11 Operating Fund Internally Restricted Reserves Pooled Funds Statement of Revenue and Expenditure For the year ended December 31, Revenue Distributed revenue from Pooled Funds 205, ,139 Expenditure Amounts distributed 205, ,139 Change in fair value of marketable investments (302,974) 28,153 (97,089) 223,292 Excess of revenue over expenditure (expenditure over revenue) for the year 302,974 (28,153) Capital Assets Fund Statement of Revenue and Expenditure For the year ended December 31, Revenue Gain on sale of assets - 12,269 Expenditure Depreciation of capital assets 34,059 30,924 Amortization of deferred contributions (16,806) (12,008) Transaction costs - 6,041 Interest on loan 11,902 9,923 29,155 34,880 Excess of expenditure over revenue for the year (29,155) (22,611) The accompanying notes are an integral part of these financial statements. (10)

12 Statement of Cash Flows For the year ended December 31, (restated) Cash flows from operating activities Excess of revenue over expenditure (expenditure over revenue) for the year 321,851 (141,869) Items not affecting cash Depreciation of capital assets 34,059 30,924 Amortization of deferred contributions (16,806) (12,008) Gain on sale of assets - (3,384) Change in fair value of marketable investments (302,974) 28,153 Provision for bad debt on accounts receivable (48) 71,199 36,082 (26,985) Net changes in non-cash working capital items Accounts receivable (20,841) 43,619 Due from The Synod of the Anglican Church in the Diocese of Quebec (41,578) (28,663) Due from The Lord Bishop of Quebec, Corporation Sole (16,843) (12,294) Due to The Church Society of the Diocese of Quebec Funds Under Management: Pooled Funds - 6,297 Prepaid expenses 21,703 (19,435) Accounts payable (21,413) (26,750) Due to The Church Society of the Diocese of Quebec Funds Under Management: Pooled Funds (10,000) 10,000 (88,972) (27,226) Other item Pension benefits paid (15,458) (15,458) (68,348) (69,669) Cash flows from investing activities Sale of marketable investments 80,000 - Receipts of advances receivable 15,238 11,517 Provision for bad debt on advances receivable 8 19,652 Acquisition of capital assets (270,253) (10,227) Proceeds from the sale of capital assets - 60,000 Net acquisition of marketable investments (601) (820) (175,608) 80,122 Cash flows from financing activities Grant accounted for as deferred contribution 191,930 3,941 Payments on long-term debt (62,165) (58,307) Long-term demand loan 100, ,765 (54,366) Decrease in cash (14,191) (43,913) Cash (cash indebtedness) Beginning of year (17,688) 26,225 Cash indebtedness End of year (31,879) (17,688) Interest paid 33,224 27,111 Acquisition of capital assets included in accounts payable 7,090 - The accompanying notes are an integral part of these financial statements. (11)

13 December 31, 1 Statutes, nature of activities and presentation of financial statements The Church Society of the Diocese of Quebec (the "Church Society") is a charitable organization Jehoshaphat Mountain, Lord Bishop of Quebec, and incorporated by statute law, Act 7 Victoria, Chapter 68, as passed in the civil legislature of Lower Canada in The Church Society is governed by this law and amending acts as well as by the Church Society's constitution and by-laws. The Church Society was created to aid the missionary and evangelical work of the Anglican Church in Upper and Lower Canada, and continues to encourage the ministry and witness of the Anglican Church through its faithful support of the vocation of The Synod of the Anglican Church in the Diocese of Quebec ("Synod"). As a registered charitable organization, the Church Society is exempt of tax. The Church Society uses the fund accounting in its financial statements. These funds are described as follows: The Church Society of the Diocese of Quebec Operating Fund (a) Externally unrestricted reserves The Sabbaton Administration Fund This Fund includes revenue generated by investments in Pooled Funds, by loans to various bodies in the Diocese of Quebec and by management and administration fees charged against revenue generated by all Funds held in trust. This revenue is at the discretion of the Central Board and is undesignated. (b) Internally restricted reserves Mission Funds These Funds, invested in Pooled Funds, generate revenue to support the missionary work of the Church Society. By resolution of the Central Board, revenues are disbursed to Synod. Episcopal & Administration Funds These Funds, invested in Pooled Funds, generate revenue to support the Episcopacy and the staff of Synod. By resolution of the Central Board, revenues are disbursed to Synod. Program Funds These Funds, invested in Pooled Funds, generate revenue to support the Program Work of Synod. By resolution of the Central Board, revenues are disbursed to Synod. (12)

14 December 31, Pension Funds These Funds represent the balance of the Church Society Pension Funds which remained in the Church Society's care after the Diocese of Quebec joined the General Synod pension plan. They are used to pay "regular pensions" to former lay employees of Synod. The balance left after this fiduciary obligation is fulfilled is distributed as "supplementary pensions" to some clergy and lay who have retired from the Diocese or to their surviving spouses. Both pensions are set annually by the Central Board. St. Matthew's This Fund, invested in Pooled Funds, generates revenue to support a stipendiary cleric in Metropolitan Quebec. By resolution of the Central Board, revenues are disbursed to the congregation of St. Michael's Sillery. Gaspé Deanery Council This Fund, invested in Pooled Funds, generates revenue to support the ministry of the Deanery of Gaspé. By resolution of the Central Board, revenues are disbursed to Synod and forwarded to the Deanery of Gaspé. East Angus Funds These Funds, invested in Pooled Funds, generate revenue to support the ministry of the congregation of St. Peter's Cookshire. By resolution of the Central Board, revenues are disbursed to St. Peter's Cookshire. Chaplaincy Fund This is an internal reserve established by the Central Board to generate revenue which will be retained and used to decrease the stipend and benefit cost of the Chaplains. Fort Haldimand This is an internal reserve established by the Central Board to generate revenue which will be retained and used to decrease the accounts receivable from Fort Haldimand. St. Laurent Deanery Council This Fund generates revenue to support the St. Laurent Deanery Council. Archdeacon of North Shore This Fund generates revenue to support the responsibility allowances of the Archdeacon of the Lower North Shore. (13)

15 December 31, Responsibility Allowances This Fund generates revenue to support the responsibility allowances of Synod. Ministry Development Fund This Fund generates revenue that is to be remitted to Synod for its ministry, with a priority for ministry in the regions where the investments originated from. Pooled Funds These Funds are the equity of the Church Society invested in Pooled Funds and are managed by the Church Society. (c) Externally restricted reserves, assigned by the Operating Fund Miscellaneous Cemetery Fund This Fund, invested in Pooled Funds, generates revenue to support the work of repairing / maintaining orphaned cemeteries in the geographic territory of the Diocese of Quebec. North Shore Deanery Funds These Funds, invested in Pooled Funds, generate revenue to support the ministry of the Deanery of the North Shore. By resolution of the Central Board, revenues are disbursed to Synod and forwarded to the Deanery of the North Shore. Life Membership Fund This Fund, invested in Pooled Funds, generates revenue to support the administrative work of the Church Society. Education Fund This Fund, invested in Pooled Funds, generates revenue to aid clergy children with schooling. The Church Society of the Diocese of Quebec Capital Assets Fund This Fund consists of investments in capital assets: the Episcopal Residence "Bishopthorpe", the Naskapi Church complex in Kawawachikamach, houses in Mutton Bay, 14 other land assets (cemeteries, cemetery lots, glebes and churches), etc. (14)

16 December 31, 2 Summary of significant accounting policies Basis of presentation The Church Society prepared its financial statements in accordance with Canadian accounting standards for not-for-profit organizations (ASNPO) as issued by the Canadian Accounting Standards Board. Use of estimates The preparation of financial statements in conformity with ASNPO requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported in the financial statements. Those estimates and assumptions also affect the disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Revenue recognition Restricted contributions are recognized as revenues of the appropriate fund in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenues of the appropriate fund when received or receivable if the amount to be received is reasonably estimated and collection is reasonably assured. Endowment contributions are recognized as a direct increase in the appropriate fund. Financial instruments Recognition and Measurement All financial assets are measured at fair value on initial recognition. Accounts receivable, due from Synod, due from The Lord Bishop of Quebec, Corporation Sole and advances receivable are recorded at cost or amortized cost. Accounts payable, demand loans and long-term debt are recorded at amortized cost. Cash, credit margin and investments are measured at fair value. Each listed investment is valued at the latest bid price. Changes in fair value are recognized in the statement of revenue and expenditure in the period incurred. Contributions Contributions are accounted for using the deferral method. (15)

17 December 31, Contributions received as services Each year, volunteers spend a lot of time helping the Church Society to provide its services. Considering the difficulty in establishing the fair value of contributions received consisting of services, these are not recognized in the financial statements. Investment transactions Investment transactions are accounted for on the transaction date. Capital assets Capital assets are accounted for at cost and are depreciated using the straight-line method over their estimated useful lives as follows: Years Bishop's house 40 Mutton Bay house 40 Naskapi Church 40 Furniture 10 Deferred contributions Deferred contributions represent contributed capital assets and restricted contributions for different capital asset acquisitions. Deferred contributions are amortized at the rates used in the calculation of the depreciation of related capital assets. Defined benefit pension plan The Church Society recognizes its obligations under the defined benefit pension plan and the related costs, net of plan assets, using the immediate recognition approach. In this regard, the Church Society has adopted the following policies: For the purpose of calculating the expected rate of return on plan assets, such assets are measured at fair value; Net gains or losses in excess of the accrued benefit obligation are recognized in the statement of revenue and expenditure as they occur. (16)

18 December 31, New accounting policies The Canadian Accounting Standards Board (AcSB) has released new Section 3462, Employee Future Benefits and Section 3463, Reporting Employee Future Benefits by Not-for-Profit Organizations. These sections will replace Section 3461 in Part II of the CPA Canada Handbook. These standards will be effective for years beginning on or after January 1, 2014, and will be applied retrospectively. Earlier adoption is permitted provided an organization adopts both standards and they are applied to all of an organization's benefit plans. In, the Church Society adopted both of these standards retrospectively. Summary of significant changes The defined benefit liability (asset) recognized on the statement of financial position is the defined benefit obligation less the fair value of plan assets, adjusted for any valuation allowance, at the statement of financial position date. "Remeasurements and other items" (consisting of gains and losses, past service costs, settlements, and curtailments) is recognized immediately. Under Section 3463, not-for-profit organizations recognize these remeasurements and other items directly in the statement of net assets (rather than immediately in the income statement, as will be required for private enterprises adopting Section 3462). These remeasurements and other items will not be reclassified from net assets to the statement of revenue and expenditure in a subsequent period. Valuation and Measurement Date The measurement of plan assets and plan obligations is required at the statement of financial position date rather than up to three months before that date. A roll forward technique may be applied for obligations calculated prior to the statement of financial position date. Section 3462 allows the use of either: (i) a going concern funding valuation; or (ii) a valuation prepared for accounting purposes. The same approach must be used for all plans. However, organizations using approach (i) that have plans with no funding valuation may use a valuation prepared for accounting purposes. Other changes The expected return on plan assets is estimated using the same discount rate as is used to determine the plan obligation. A separate rate of return assumption on plan assets is no longer required. For defined contribution plans, past service costs are recognized in the current period, instead of amortizing them over future periods. This change is consistent with the elimination of deferral and amortization for defined benefit plans. (17)

19 December 31, 3 Marketable investments Operating Fund Pooled Funds Units 174, ,976 Cost 3,317,386 3,396,784 Fair value 2,574,474 2,382,871 In, new units were acquired at a cost of 602 and 5,476 units were sold at a cost of 80,000. As at December 31,, the fair value of a unit amounts to (13.24 in ). In addition, 21,173 additional units are held by the Pension Funds with a total fair value of 312,309 (280,337 in ). The total units held in the Pooled Funds including those in the Pension Funds are as follows: Units 195, ,149 Fair value 2,886,783 2,663,208 (18)

20 December 31, 4 Advances receivable Due from Magog, bearing interest at 3% semi-annually, payable in annual principal and interest instalments of 6,638, maturing in December ,630 56,558 Due from Hopetown, bearing interest at 7.5% semi-annually, payable in annual principal and interest instalments of 666, paid in full in December - 2,008 Due from Inverness, bearing interest at 5% annually, payable in annual principal and interest instalments of 2,450, maturing in December ,090 12,888 Due from Hatley, bearing interest at 3% semi-annually, payable in monthly principal and interest instalments of 46, maturing in December ,316 3,757 Due from St. Michael's, bearing interest at 6% semi-annually, payable in annual principal and interest instalments of 3,975, maturing in December ,713 48,721 Due from Old Harry, bearing interest at 2.3% semi-annually, payable in annual principal and interest instalments of 785, maturing in September ,580 12,082 Due from Bradore, bearing interest at 5%, payable in annual principal and interest instalments of 2,452, maturing in December ,712 14,712 Due from St. Clement East parishes, bearing interest at 6% annually, payable in annual principal and interest instalments of 8,226, maturing in December ,717 63,270 Due from clergy, non-interest bearing, payable in monthly instalments of 300 4,948 4, , ,944 Less: Provision for doubtful accounts 19,660 19,652 Current portion 13,838 20, , ,894 (19)

21 December 31, 5 Capital assets Cost Accumulated depreciation Net Net Mutton Bay Land 1,170-1,170 1,170 Sundry Lands 1,930-1,930 1,930 Bishop's house 1,098, , , ,424 Mutton Bay house 36,191 11,762 24,429 25,334 Naskapi Church 334, , , ,716 Furnishings 8,969 2,725 6,244 7,119 1,481, ,229 1,101, ,693 The depreciation expense amounts to 34,059 (30,924 in ). 6 Accounts payable Trade accounts 23,277 32,705 Government remittances 19,891 24,786 Total accounts payable 43,168 57,491 7 Demand loans Capital Assets Fund Demand loan of 100,000 with the Bank of Montreal, bearing interest at a variable rate of the lender's prime rate plus 0.75%, payable in monthly instalments of 835 plus interest 92,209 - Demand loan of 300,000 with the Bank of Montreal, bearing interest at a variable rate of the lender's prime rate plus 0.75%, payable in monthly instalments of 1,684 plus interest 234, , , ,352 The demand loans are guaranteed by a moveable hypothec on all units belonging to the Church Society of the Diocese of Quebec in Pooled Funds with a fair value amounting to 2,886,783 as at December 31, (2,663,208 in ) (20)

22 December 31, The interest charge on these loans in was 11,901 in the Capital Assets Fund (9,923 in the Capital Assets Fund in ). 8 Deferred contributions Balance Beginning of year 374, ,255 Grant received during the year 191,930 3, , ,196 Less: Amortization 16,806 12,008 Balance End of year 549, ,188 9 Long-term debt Term debt of 2,000,000 with the Bank of Montreal, bearing interest at a fixed rate of 3.15%, payable in monthly instalments of 4,624 including interest, maturing on July 31, , ,954 Less: current portion 575,794 36, ,140 The term debt is up for renewal on July 31, To guarantee this term loan as well as the demand loans listed in note 7, the Church Society has agreed to maintain pledged Pooled Funds investments through BMO Nesbitt Burns covering the outstanding balance of the loans. For this purpose, the value of the Pooled Funds investments is to be determined in accordance with the following criteria: Highly rated bonds (A-/A3 or higher or provincial) Lower rating bonds (BBB/Baa3 or higher) Equities with par value greater than 5 90% of market value 80% of market value 50% of market value The condition is met as at December 31,. The interest charge on this debt in was 21,323 (17,188 in ). (21)

23 December 31, 10 Pension plans Net defined benefit plan assets The Church Society is committed to pay an annual benefit to three retired employees totalling an amount of 15,773 per year. As at December 31,, this defined benefit plan liability is covered by 21,173 units (21,173 in ) accounted for in the internally restricted Pension Funds and held in the Pooled Funds. In addition to this plan, the Church Society paid discretionary amounts of 12,650 (25,166 in ) to other retired employees in supplementary pensions on health benefits. Defined benefit plan assets and liabilities are as follows: Pension plan assets (Pension Funds) 312, ,337 Defined benefit obligation 121, ,521 Net defined benefit plan assets 190, ,816 The net defined benefit plan assets movements are as follows: Opening balance 143, ,975 Change in fair value of pension plan assets (Pension Funds) 31,972 (2,964) Benefit plan payments 15,458 15,458 Pension plan revaluation (354) (7,653) Closing balance 190, ,816 The principal assumptions used to measure the defined benefit plan obligation are as follows: Discount rate 4.65% 3.85% Remaining years of the plan The situation of the pension plan is as follows as at December 31: Defined benefit plan assets 312, ,337 Pension Funds accumulated deficit (339,928) (344,877) Net deficit (27,619) (64,540) (22)

24 December 31, Multiemployer plan The Church Society's eligible employees participate to the pension fund of the General Synod of the Anglican Church of Canada. This pension plan is a defined contribution plan for multiple employers. In, the contribution rate for the Church Society was 12.4% of the employee salary. For the year ended December 31,, the Church Society recorded an expenditure of 6,552 (8,700 in) in the Operating Fund. The Church Society's commitments for this pension fund are limited to the employer's defined contribution. 11 Financial instruments Fair value The Church Society's financial instruments recognized in the statement of financial position consist of cash indebtedness, accounts receivable, due from The Synod of Anglican Church in the Diocese of Quebec and from The Lord Bishop of Quebec, Corporation Sole, marketable investments, accounts payable, credit margin, demand loans and long-term debt. The fair value of accounts receivable, short-term advances receivable, and accounts and advances payable approximate their carrying value due to their short-term maturity. Cash indebtedness and marketable investments are recognized at their fair value. The fair value of advances receivable, credit margin, demand loans and long-term debt approximates their carrying value because they bear interest at current market rates. Interest rate risk As at December 31,, the Church Society's exposure to interest rate risk is summarized as follows: Cash indebtedness Variable interest rate Accounts receivable Non-interest bearing Advances receivable As described in note 4 Accounts payable Non-interest bearing Demand loans As described in note 7 Long-term debt As described in note 9 Credit risk Financial instruments that potentially subject the Church Society to credit risk consist of cash indebtedness and marketable investments as at December 31,. The Church Society's marketable investments and cash consist of liquidity, bonds and equities issued and held by high credit quality corporations, trusts and financial institutions. (23)

25 December 31, Financial risk With regard to its marketable investments, the Church Society is exposed to three types of risk: Currency risk, which is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Interest rate risk, which is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Market risk, which is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded on the market. Liquidity risk The Church Society is exposed to liquidity risk with regards to its accounts payable, cash indebteness, demand loans and long-term debt if it encounters difficulty in raising funds to meet the commitments associated with these financial instruments. Liquidity risk may also result from the Church Society's inability to sell a financial asset quickly at close to its fair value. 12 Commitments The Church Society has been mandated by some of the congregations of the Diocese of Quebec to act as their agent in providing payroll and insurance services. As at December 31,, the Church Society has received 1,008,469 from the congregations and has paid 796,789 in salaries, travel and 239,672 in insurance and honoraria. (24)

26 December 31, 13 Restatement of comparative financial statements The financial statements as at December 31, and for the year then ended, and the opening balance of the Statement of Financial Position as at January 1, have been restated to give effect to the recognition of a defined benefit plan obligation to comply with Section 3462 Employee Future Benefits of the CPA Canada Handbook. The effects of the adjustments are as follows: Statement of Financial Position January 1, December 31, As previously reported Restatements Balance restated As previously reported Restatements Balance restated Assets Net defined benefit plan assets - 138, , , ,816 Marketable investments 2,990,736 (283,301) 2,707,435 2,663,208 (280,337) 2,382,871 Statement of Changes in Net Assets For the year ended December 31, As previously reported Restatements Balance restated Net assets Net assets Internally restricted reserves 2,447,465 (136,521) 2,310,944 Statement of Revenue and Expenditure Internally Restricted Reserves Pension Funds For the year ended December 31, As previously reported Restatements Balance restated Pension expenses 40,624 (15,458) 25,166 (25)