cpahs- INDEPENDENT AUDITOR'S REPORT

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2 T.A Ted R Lupm&kt " cpahs- INDEPENDENT AUDITOR'S REPORT To the National Executive and Members of the Union of National Employees - PSAC: I have audited the accompanying financial statements of the Union of National Employees - PSAC which comprise the balance sheet as at December 31, 2015 and the statements of revenue and expenses, changes in net assets 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 My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Ted R. Lupinski, B.Sc, C.P.A., C.A.* Second Avenue, Ottawa, Ontario, Canada K1S2H4 V 613,233, "n w tedlupinski@rogers.com

3 Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the Union of National Employees - PS AC as at December 31, 2015 and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for notfor-profit organizations. Ottawa, February 26, 2016 Ted R. Lupinski, C.P.A., C.A. Professional Corporation, Authorized to practise public accounting by CPA Ontario fed H Lirpmrnki CPA f S3

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5 STATEMENT OF REVENUE AND EXPENDITURES FOR THE YEAR ENDED DECEMBER REVENUE TOTAL REVENUES Dues Interest and dividends Gains/(Losses) on investments $ 6,853, ,008 (59,895) $ 6,970,658 6,220, , ,715 $6,611,542 EXPENDITURES Staff Member Service Employee benefits Provision for severance pay Salaries Staff recruitment and training Staff travel and expenses 731,062 45,694 2,023,848 25,761 33, ,397 35,927 2,274,984 77,773 32,996 Total Staff Member Service 2,859,639 3,254,077 Membership Empowerment Collective bargaining 2,979 Conferences and seminars 322,173 Conventions and conferences - PSAC 32,461 Donations 5,900 Human rights committee and conference 108,196 Member representation 25,826 Member training 9,176 Non-recurring membership services 15,865 Promotional items 7,204 Provision for honours, awards and bursaries 39,996 Translation - written 53,417 UMC committees 27,443 Total Membership Empowerment 650, , ,004 4, ,800 13,246 1,858 9,507 15,976 30,000 72,350 25, ,168 Leadership Executive expense regional activities Executive expense national activities Executive meetings National President expense Provision for President relocation expense 225,920 66, , , ,643 63, , ,381 Total Leadership 658,580 1,104,968 Office Operations Depreciation expense General office expenses Insurance Professional fees Rent 135, ,415 26,669 48, , , ,173 26,553 59, ,820 Total Office Operations 694, ,768 Convention Total Convention Triennial convention 658, , , ,200 TOTAL EXPENDITURES 5,521,875 6,605,181 EXCESS OF REVENUE OVER EXPENDITURES $ 1,448,783 6,361 Ted R Lupinski \ CPA

6 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31,2015 Unrestricted Invested in capital assets Restricted BALANCE, BEGINNING OF YEAR $ 2,835,844 $ 401,225 $ 3,302,590 $ 6,539,659 $ 6,333,907 Excess of revenue over expenditures 1,448,783 1,448,783 6,361 Depreciation of capital assets 135,947 (135,947) Transfers during year 552,975 (541,652) 11, ,391 Acquisition of capital assets (42,735) 42,735 BALANCE, END OF YEAR $ 4,930,814 $ 308,013 $ 2,760,938 $ 7,999,765 $ 6,539,659 Ted R Lupinski : '*'CpA

7 BALANCE SHEET DECEMBER 31, 2015 ASSETS CURRENT ASSETS Cash Accrued interest receivable Dues receivable - PSAC Officers' standing advances Sundry accounts receivable Inventory Prepaid expenses INVESTMENTS (notes 1 and 11) CAPITAL ASSETS (note 3) LIABILITIES CURRENT LIABILITIES Accounts payable and accrued charges Payroll and withholding taxes Rebates payable to locals PROVISIONS (note 1) Severance pay (note 2) Accessibility Triennial convention (note 4) Scholarships (note 5) Overtime and accumulated vacation leave (note 6) National President relocation (note 7) NET ASSETS (note 1) Unrestricted Invested in capital assets Restricted ,330 21, ,454 7,750 3,949 29,163 79,174 1,203,927 8,333, ,013 9,845, ,131 33, , , ,983 15, ,333 47, , ,000 1,423,224 1,845,597 4,930, ,013 2,760,938 7,999,765 9,845, $ 990,732 17, ,470 6,550 33,880 36,701 60,665 1,705,989 5,727, ,225 $ 7,834, ,872 26, , , ,808 15,036 19, , , ,843 1,294,731 2, ,225 3,302,590 6,539,659 $ 7,834,390 ON RBI ^OF THE NATIONAL EXECUTIVE President National Executive Vice-President * CPA

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9 NOTES TO THE FINANCIAL STATEMENTS DECEMBER DESCRIPTION OF ORGANIZATION The mission of the Union of National Employees, a progressive and democratic component of the Public Service Alliance of Canada, is to ensure members, elected officials and staff: - Work in solidarity to represent a diverse membership; - Support and empower locals and members; - Protect, promote and advance workers rights and human rights. It is exempt from income tax under paragraph 149(6) of the Income Tax Act. 1. SUMMARY OF CANADIAN SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared in accordance with Canadian accounting standards for not-for-profit organizations and include the following significant accounting policies: A. INVENTORY Inventory, which consists of promotional items, is valued at the lower of cost and current replacement value. B. INVESTMENTS The investments are recorded at fair value. Fair values are determined by published price quotations in an active market at year-end. C. CAPITAL ASSETS Purchases of capital assets are recorded at cost and are depreciated on the straight-line basis over the following periods: Equipment Furniture Cabinets Fixtures and equipment 3 years 4 years 5 years 10 years Items under $500 and computer software are completely depreciated in the year of acquistion. Ted R Lupinski

10 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2015 D. PROVISIONS Amounts shown as expenditures for severance pay, accessibility, triennial convention, scholarships, overtime and accumulated vacation leave and National President relocation contain charges not yet incurred, but which have been included in the annual budget. The total of these charges is included the provisions liability section of the balance sheet. E. NET ASSETS Unrestricted net assets are maintained at a level of at least ten percent of operating expenses while the restricted net assets are maintained at a level of fifty percent of operating expenses. F. RECOGNITION OF REVENUE The component records membership dues and investment income on an accrual basis. Investment income comprises interest from cash, interest from fixed income investments, dividends and realized and unrealized gains and losses on the sale of investments. G. LOCALS The financial statements do not include the accounts of the locals. H. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the amounts recorded in the financial statements. These estimates are based on management's best knowledge of current events and actions that the Union may undertake in the future. Actual results may differ from these estimates. 2 - PROVISION FOR SEVERANCE PAY The provision for severance pay is funded by an amount included in the investments ($459,154).

11 NOTES TO THE FINANCIAL STATEMENTS DECEMBER CAPITAL ASSETS Equipment Furniture Cabinets Fixtures and equipment Accumulated Cost depreciation ,510 $ 64,941 $ 47,569 $ 61,440 18,736 13,334 5,402 9,110 45,299 15,503 29,796 38, , , , ,819 $ 841,321 $ 533,308 $ 308,013 $ 401,225 During the year, $42,735 ( $134,608) was spent on additions to capital assets. 4- PROVISION FOR TRIENNIAL CONVENTION Balance - beginning Current provision Expenses incurred Transfer to unrestricted net assets Balance - ending 658,333 $ 658,333 $ 1,553, ,200 (2,132,272) (222,395) $ 5 - PROVISION FOR SCHOLARSHIPS Balance - beginning Current provision Expenses incurred Balance - ending 2015 $ 19,637 39,996 (12,278) $ 47, $ 3,332 30,000 (13,695) $ 19,637 Ted R JL J? JHH JSJjPlOi

12 NOTES TO THE FINANCIAL STATEMENTS DECEMBER PROVISION FOR OVERTIME AND ACCUMULATED VACATION LEAVE Balance - beginning Transfer from (to) unrestricted net assets Balance - ending $ 134,362 $ 111,358 (15,845) 23,004 $ 118,517 $ 134, PROVISION FOR NATIONAL PRESIDENT RELOCATION Balance - beginning $ 165,000 $ 165,000 Current provision Balance - ending $ 165,000 $ 165, RELATED PARTIES TRANSACTIONS The Union has concluded transactions with some of its members, with the Public Service Alliance of Canada and with its locals. These transactions have occurred in the current course of business. 9. PENSION PLAN The Union participates in a defined benefit multi-employer pension plan. It recognizes as expenses for current services the amount of its contribution in a given year. 10. FINANCIAL INSTRUMENTS Cash, dues receivable, accrued interest receivable, other receivables, creditors and accrued liabilities and rebates payable to locals are financial instruments with a market value presumed to be equal to their book value because of their short-term nature. It is management's opinion that the Union is not exposed to significant interest rate, currency, liquidity or credit risks arising from these financial instruments. CpA Hi

13 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, INVESTMENTS Concentration of risk exists when a significant proportion of the portfolio is invested in securities with similar characteristics or subject to similar economic, political and other conditions. Management believes that the concentrations described above do not represent excessive risk. 12. LEASE OBLIGATION The Union has renewed its lease for office space for a further ten year period, which expires on June 30, The minimum commitment on an annual basis is $327,503. # Ted R Lupinski a cpil

14 STATEMENT OF REVENUE AND EXPENDITURES FOR THE YEAR ENDED DECEMBER 31, COMPARISON OF ACTUAL REVENUE AND EXPENDITURES TO BUDGETED AMOUNTS REVENUE Actual Budaet Variance (Under) Dues Interest and dividends Gains/(Losses) on investments $ 6,853, ,008 (59,895) $ 6,682, ,000 $ 171,152 27,008 (59,895) TOTAL REVENUES $ 6,970,658 $ 6,832,393 $ 138,265 EXPENDITURES Staff Member Service Employee benefits Provision for severance pay Salaries Staff recruitment and training Staff travel and expenses 731,062 45,694 2,023,848 25,761 33, ,955 55,000 2,139,256 65,000 75,000 (83,893) (9,306) (115,408) (39,239) (41,726) Total Staff Member Service 2,859,639 3,149,211 (289,572) Membership Empowerment Collective bargaining Conferences and seminars Conventions and conferences - PSAC Donations Human rights committee and conference Member representation Member training Non-recurring membership services Promotional items Provision for honours, awards and bursaries Translation - written UMC committees 2, ,173 32,461 5, ,196 25,826 9,176 15,865 7,204 39,996 53,417 27,443 10, , ,000 6, ,000 35,000 20,000 15,000 10,000 40,000 70,000 50,000 (7,021) (179,494) (67,539) (767) (141,804) (9,174) (10,824) 865 (2,796) (4) (16,583) (22,557) Total Membership Empowerment 650,636 1,108,334 (457,698) Leadership Executive expense - regional activities Executive expense - national activities Executive meetings National President expense Provision for President relocation expense 225,920 66, , , , , , ,000 (170,595) (43,851) (155,413) (43,076) Total Leadership 658,580 1,071,515 (412,935) Office Operations Depreciation expense General office expenses Insurance Professional fees Rent 135, ,415 26,669 48, , , ,000 35,000 70, ,000 (64,053) (54,585) (8,331) (21,999) (16,345) Total Office Operations 694, ,000 (165,313) I I Convention Triennial convention 658, ,333 - Total Convention 658, ,333 - TOTAL EXPENDITURES 5,521,875 6,847,393 (1,325,518) EXCESS OF REVENUE OVER EXPENDITURES $ 1,448,783 $ (15,000) $ 1,463,783 Ted R Lupin ski j CPA