1. SIGNIFICANT ACCOUNTING POLICIES

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3 August 31, 2010 Notes to Consolidated Financial Statements 1. SIGNIFICANT ACCOUNTING POLICIES a) Reporting Entity The consolidated financial statements reflect the assets, liabilities, revenues and expenses of the reporting entity. The reporting entity is comprised of all organizations accountable for the administration of their financial affairs and resources to the Board and which are controlled by the Board. School generated funds, which include the assets, liabilities, revenues and expenses of various organizations that exist at the school level and which are controlled by the Board are reflected in the consolidated financial statements. Interdepartmental and inter-organizational transactions and balances between these organizations are eliminated. b) Trust Funds Trust funds and their related operations administered by the Board are not included in the consolidated financial statements as they are not controlled by the Board. c) Basis of Accounting Revenues and expenses are reported on the accrual basis of accounting. The accrual basis of accounting recognizes revenues as they are earned and measurable; expenses are the cost of goods and services acquired in the period whether or not payment has been made or invoices received. d) Cash and Cash Equivalents Cash and cash equivalents comprise of cash on hand, demand deposits and short-term investments. Short-term investments are highly liquid, subject to insignificant risk of changes in value and have a short maturity term of less than 90 days. e) Investments Temporary investments consist of marketable securities which are liquid shortterm investments with maturities of between three months and one year at the date of acquisition, and are carried on the Consolidated Statement of Financial Position at the lower of cost or market value. Page 1

4 August 31, 2010 Notes to Consolidated Financial Statements Long-term investments consist of investments that have maturities of more than one year. Long-term investments are recorded at cost, and assessed regularly for permanent impairment. f) Deferred Revenue Certain amounts are received pursuant to legislation, regulation or agreement and may only be used in the conduct of certain programs or in the delivery of specific services and transactions. These amounts are recognized as revenue in the fiscal year the related expenditures are incurred or services performed. g) Retirement and other employee future benefits The Board provides defined retirement and other future benefits to specified employee groups. These benefits include pension, life insurance, health care benefits, retirement gratuity, worker s compensation and long-term disability benefits. The Board has adopted the following policies with respect to accounting for these employee benefits: (i) The costs of self insured retirement and other employee future benefit plans are actuarially determined using management s best estimate of salary escalation, accumulated sick days at retirement, insurance, health care costs trends, disability recovery rates, long-term inflation rates and discount rates. For self insured retirement and other employee future benefits that vest or accumulate over the periods of service provided by employees, such as retirement gratuities and life insurance, health care benefits for retirees, the cost is actuarially determined using the projected benefits method prorated on service. Under this method, the benefit costs are recognized over the expected average service life of the employee group. Any actuarial gains and losses related to the past service of employees are amortized over the expected average remaining service life of the employee group. For those self insured benefit obligations that arise from specific events that occur from time to time, such as obligations for worker s compensation, longterm disability and life insurance, health care benefits for those on disability leave, the cost is recognized immediately in the period the events occur. Any actuarial gains and losses that are related to these benefits are recognized immediately in the period they arise. (ii) The costs of multi-employer defined pension plan benefits, such as the Ontario Municipal Employees Retirement System pensions, are the employer s contributions due to the plan in the period; Page 2

5 August 31, 2010 Notes to Consolidated Financial Statements (iii) The costs of insured benefits are the employer s portion of insurance premiums owed for coverage of employees during the period. h) Tangible Capital Assets Tangible capital assets are recorded at historical cost less accumulated amortization. Historical cost includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. When historical cost records were not available, other methods were used to estimate the costs and accumulated amortization. Tangible capital assets, except land, are amortized on a straight line basis over their estimated useful lives as follows: Asset Estimated Useful Life in Years Land improvements with finite lives 15 Buildings and building improvements 40 Portable Structures 20 Other Buildings 20 First time equipping of schools 10 Furniture 10 Equipment 5-15 Computer hardware 5 Computer software 5 Vehicles 5-10 Assets under construction are not amortized until the asset is available for productive use. Land permanently removed from service and held for resale is recorded at the lower of cost and net realizable value. Cost includes amounts for improvements to prepare the land for sale or servicing. Building permanently removed from service ceases to be amortized and the carrying value is written down to its residual value. Works of art and cultural and historic assets are not recorded as assets in these consolidated financial statements. i) Government Transfers Government transfers, which include legislative grants, are recognized in the consolidated financial statements in the period in which events giving rise to the transfer occur, providing the transfers are authorized, any eligibility criteria have been met and reasonable estimates of the amount can be made. Page 3

6 August 31, 2010 Notes to Consolidated Financial Statements j) Investment Income Investment income is reported as revenue in the period earned. When required by the funding government or related Act, investment income earned on externally restricted funds such as pupil accommodation, education development charges and special education forms part of the respective deferred revenue balances. k) Long-term Debt Long-term debt is recorded net of related sinking fund balances. l) Budget Figures Budget figures have been provided for comparison purposes and have been derived from the budget approved by the Trustees. The budget approved by the Trustees is developed in accordance with the provincially mandated funding model for school boards and is used to manage program spending with the guidelines of the funding model. Given differences between the funding model and generally accepted accounting principles established by the Public Sector Accounting Board, the budget figures presented have been adjusted to conform with this basis of accounting as it is used to prepare the consolidated financial statements. The budget figures are unaudited. m) Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the year. o) Segmented Information The Keewatin-Patricia District School Board is a government institution that provides primarily education services. No additional disclosure on a segmented basis was considered necessary as the Board considers all the services and activities they provide to be encompassed in the segment of education. p) Currency All tabular amounts are reported in Canadian dollars. Page 4

7 August 31, 2010 Notes to Consolidated Financial Statements 2. CHANGE IN ACCOUNTING POLICIES The Board has implemented Public Sector Accounting Board ( PSAB ) sections 1200 Financial Statement Presentation and 3150 Tangible Capital Assets. Section 1200 establishes general reporting principles and standards for the disclosure of information in government financial statements. Section 3150 requires governments to record and amortize their tangible capital assets in their financial statements. In prior years, tangible capital asset additions were expensed in the year of acquisition or construction. The financial information recorded includes the actual or estimated historical cost of the tangible capital assets. Historical cost includes the costs directly related to the acquisition, design, construction, development, improvement or betterment of tangible capital assets. Cost includes overheads directly attributable to construction and development. When historical cost records were not available, other methods were used to estimate the costs and accumulated amortization of the assets. The estimates for land and buildings were determined by the Ministry of Education using an estimation methodology called the Book Value Calculator, using historical information provided by the Board. Other assets classes are recorded as historical cost where adequate information was available. If adequate information was not available, an alternative method was used to estimate a reasonable cost. This change has been applied retroactively and prior periods have been restated. This change in accounting policy has changed amounts reported in the prior period as follows: Accumulated surplus at August 31, 2009: Operating fund balance 0 Capital fund balance (1,270,630) Reserve fund balance 13,496,527 School activities fund 1,011,146 Amounts to be recovered (43,666,713) Accumulated surplus, as previously reported (30,429,670) Net book value of tangible capital assets recorded 70,465,727 Reclassify Deferred Revenue 251,492 Include District School Authorities 1,465,060 Accumulated surplus, as restated 41,752,609 Page 5

8 August 31, 2010 Notes to Consolidated Financial Statements Annual surplus for the year ended August 31, 2009: Annual surplus, as previously reported 1,087,092 Plus: Capital Expenditure capitalized, previously expensed 2,588,307 Less: Amortization expense not previously recorded (2,123,552) Include District School Authorities (209,848) Annual surplus, as restated 1,341, INVESTMENTS Investments consisting of marketable securities and accrued interest are comprised as follows: Cost Market Value Cost Market Value Term Deposit 2,002,014 2,002,014 Term Deposit 2,000,904 2,000,904 Term Deposit 2,001,151 2,001,151 Debentures 46,454 53,934 46,511 51,892 6,050,523 6,058,003 46,511 51,892 On February 16, 2010, three TD Canada Trust term deposits in the amount of $2,000,000 each were purchased. One matures on August 16, 2011 with a yield of 1.10% over a term of 1 year and 181 days. One matures on February 16, 2012 with a yield of 1.40% over a term of 2 years. One matures on November 17, 2014 with a yield of 2.45% over a term of 4 years and 274 days. Interest is paid semiannually. The weighted average yield on the cost of the debenture investments during the year was 5.61% ( %). 4. ACCOUNTS RECEIVABLE - GOVERNMENT OF ONTARIO The Province of Ontario (Province) has replaced variable capital funding with a one-time debt support grant. Keewatin-Patricia District School Board will receive a one-time grant that recognizes capital debt as of August 31, 2010 that is supported by the existing capital programs. The Board will receive this grant in cash over the remaining term of the existing capital debt instruments. The Board has an account receivable from the Province of Ontario of $14,249,175 as at August 31, 2010 with respect to this one-time grant. Page 6

9 August 31, 2010 Notes to Consolidated Financial Statements 5. DEFERRED REVENUE Revenues received and that have been set aside for specific purposes by legislation, regulation or agreement are included in deferred revenue and reported on the Consolidated Statement of Financial Position. Deferred revenue set-aside for specific purposes by legislation, regulation or agreement as at August 31, 2010 is comprised of: Balance at August 31, 2009 Balance at September 1, 2009 (Includes District School Authorities) Contributions Received and Earnings on Deferred Revenue Transferred to Revenue Balance as at August 31, 2010 Proceeds of Disposition Pupil Accommodation 50,824 50,824 - Green Schools Pilot - 212, ,075 10,864 Energy Efficient Schools 198, , , , ,761 Other 1,624,457 1,624,457 5,539 1,629,996 Total Deferred Revenue 1,822,734 1,873, , ,703 2,276,372 Note: Proceeds of Disposition opening balance of $280,665 plus in year proceeds of $31,938 from the sale of a school total at August 31, 2010 $312,601 have been transferred to internally restricted for the reporting year. Page 7

10 August 31, 2010 Notes to Consolidated Financial Statements 6. RETIREMENT AND OTHER EMPLOYEE FUTURE BENEFITS Retirement and Other Employee Future Benefits Retirement Benefits Other Employee Future Benefits Total Employee Future Benefits Total Employee Future Benefits Accrued Employee Future Benefit Obligations at August 31 7,993,196 5,149,709 13,142,905 12,899,102 Unamortized Actuarial Gains (Losses) at August ,669 (749,667) 1,002 18,376 Employee Future Benefits Liability at August 31 8,743,865 4,400,042 13,143,907 12,917,478 Retirement and Other Employee Future Benefits Retirement Benefits Other Employee Future Benefits Total Employee Future Benefits Total Employee Future Benefits Current Year Benefit Cost 612, , , ,286 Interest on Accrued Benefit Obligation 341, , , ,496 Recognized Actuarial gains (losses) 71,902 (62,716) 9,186 11,523 Increase due to plan amendment (C&P) - (41,745) (41,745) - Recognized unamortized actuarial losses (gains) on plan amendments (750,669) 749,667 (1,002) (20,559) Employee Future Benefits Expenses 1 275,059 1,158,157 1,433,216 1,423,746 1 Excluding pension contributions to the Ontario Municipal Employees Retirement System, a multi-employer pension plan, described below. a) Retirement Benefits (i) Ontario Teachers Pension Plan Teachers and related employee groups are eligible to be members of Ontario Teachers Pension Plan. Employer contributions for these employees are provided directly by the Province of Ontario. The pension costs and obligations Page 8

11 August 31, 2010 Notes to Consolidated Financial Statements related to this plan are a direct responsibility of the Province. Accordingly, no costs or liabilities related to this plan are included in the Board s consolidated financial statements. (ii) Ontario Municipal Employees Retirement System All non-teaching employees of the Board are eligible to be members of the Ontario Municipal Employees Retirement System (OMERS), a multi-employer pension plan. The plan provides defined pension benefits to employees based on their length of service and rates of pay. The Board contributions equal the employee contributions to the plan. During the year ended August 31, 2010 the Board contributed $804,714 ( $777,320) to the plan. As this is a multiemployer pension plan, these contributions are the Board s pension benefit expenses. No pension liability for this type of plan is included in the Board s consolidated financial statements. (iii) Retirement Gratuities The Board provides retirement gratuities to certain groups of employees hired prior to specified dates. The amount of the gratuities paid to eligible employees at retirement is based on their salary, accumulated sick days, and years of service at retirement. The Board provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are included in the Board s consolidated financial statements. (iv) Retirement Life Insurance and Health Care Benefits The Board continues to provide life insurance, dental and health care benefits to certain employee groups after retirement until the members reach 65 years of age. The Board provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are included in the Board s consolidated financial statements. b) Other Employee Future Benefits (i) Workplace Safety and Insurance Board Obligations The Board is a Schedule 2 employer under the Workplace Safety and Insurance Act and, as such, assumes responsibility for the payment of all claims to its injured workers under the Act. The benefit costs and liabilities related to this plan are included in the Board s consolidated financial statements. (ii) Long-term Disability Life Insurance and Health care Benefits Page 9

12 August 31, 2010 Notes to Consolidated Financial Statements The Board provides life insurance, dental and health care benefits to employees on long-term disability leave. Employees in receipt of long-term disability benefits are responsible for the payment of the premium on life insurance and deemed premium on health care benefits. The Board is responsible for any costs in excess of the employee contributions through an unfunded defined benefit plan. The costs of salary compensation paid to employees on long-term disability leave are fully insured and not included in this plan. (iii) Sick Leave Benefits The Board provides for the accumulation of unused sick days to be banked. The Board provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are included in the Board s consolidated financial statements. The accrued benefit obligations for employee future benefit plans as at August 31, 2010 are based on an actuarial valuation for accounting purposes as at August 31, These actuarial valuations were based on assumptions about future events. The economic assumptions used in these valuations are the Board s best estimates of expected rates of: Inflation % 2.0 % 2.0 Wage and salary escalation Insurance and health care cost escalation Discount on accrued benefit obligations As detailed on the Schedule of the Reserve Fund, the Board has designated reserves for certain of these employee future benefit obligations. The balance of these reserves totalled $854,301 at August 31, 2010 ( $970,990). Page 10

13 August 31, 2010 Notes to Consolidated Financial Statements 7. NET LONG TERM DEBT Net debenture debt, capital loans and obligation under capital leases reported on the Consolidated Statement of Financial Position comprises of the following: Capital Loan #5 14,408,035 14,854,521 Capital Loan #6 5,577,656 5,730,741 Capital Loan #6a 3,934,215 4,106,773 GPL Loan #1 3,852,463 3,956,257 GPL Loan #2 1,732,292 1,772,921 GPL Loan #3 1,007,233 1,028,679 Sinking Fund Debenture- Golden L.C. 586, ,000 Subtotal 31,097,894 32, 035,892 Less: Sinking Fund Assets (582,087) (472,046) Balance as at August 31 30, 515,807 31,563,846 Principal payments relating to net debenture debt and capital loans of $31,097,895 outstanding as at August 31, 2010 excluding sinking fund assets are due as follows: Sinking Fund Principal Contributions Interest Total ,594,880-1,829,391 3,424, ,071,152-1,735,094 2,806, ,035, ,747 19,885, , , , , , ,074 Thereafter 8,539,031-3,524,199 12,063,230 Total 31,097,895-8,859,877 39,957,772 (Retirement of sinking funds in the year that they mature are not included as payments in the above chart) Included in net debenture debt are outstanding sinking fund debentures of $586,000 ( $586,000) secured by sinking fund assets with a carrying value of $582,087 ( $472,046). Sinking fund assets are comprised of short-term notes and deposits, government and government-guaranteed bonds and debentures and corporate bonds. Interest on long-term debt amounted to $1,829,391 (2009- $1,920,002) Page 11

14 August 31, 2010 Notes to Consolidated Financial Statements 8. TEMPORARY BORROWINGS The Board has an operating line of credit with a Canadian financial institution bearing interest at the bank's prime rate. The maximum drawings under the terms of the operating line are $5,000,000. At year end, the Board was not using its operating line. There is a second line of credit to cover costs of the new Dryden elementary school. The maximum drawings under the terms of the capital line are $13,000,000. At year end, the Board had not drawn funds for construction costs. 9. DEBT CHARGES AND CAPITAL LOANS AND LEASES INTEREST Principal payments on long-term liabilities including contributions to sinking funds 1,031, ,744 Interest payments on long-term liabilities 1,929,556 1,943,354 Interest payments on temporary financing of capital projects 19,054 22,488 Total Debt Charges 2,980,608 2,884,586 Included in debt repayment and sinking fund contributions on the Consolidated Statement of Cash Flow in total of $1,048,040 ( $934,653) are principal payments on long-term debt of $937,998 ( $899,744) and sinking fund interest revenue of $16,042 ( $15,909). Page 12

15 August 31, 2010 Notes to Consolidated Financial Statements 10. EXPENSES BY OBJECT The following is a summary of the expenses reported on the Consolidated Statement of Operations by object: Budget Actual Actual (Un-Audited) (Restated) Expenses: Salary and wages 51,870,951 53,940,754 52,724,913 Employee benefits 8,662,514 7,634,713 7,654,208 Staff development 553, , ,259 Supplies and services 10,004,428 10,038,252 12,614,507 Interest charges on capital 1,961,202 1,948,598 1,965,842 Rental expenses 46,500 40,918 57,428 Fees and contract services 6,901,912 6,850,534 6,394,306 Other 843, ,334 1,235,910 Transfer to other boards 0 89,408 7,305 Amortization of tangible 3,804,924 3,804,924 2,952,958 capital assets Gain/loss on disposal 164, ,841 (282,874) 84,814,648 86,054,641 86,127,762 Note: Amortization was not budgeted in the year but will be in BOARD PERFORMS DUTIES OF A MUNICIPAL COUNCIL The board performs the duties of levying taxes, conducting elections of members, etc. in territory without municipal organization. The outlay by the board in in respect of performing duties of municipal council is reported by area in a separate statement. Beginning on January 1, 2009, the City of Thunder Bay collects the taxes in territory without municipal organization on behalf of the Board. Certain approved costs are recoverable through an offset to the local taxation revenue. Page 13

16 August 31, 2010 Notes to Consolidated Financial Statements 12. TANGIBLE CAPITAL ASSETS Assets In Service Opening Balance September 1, 2009 Adjustments to Opening Balance Transfers Between Asset Class COST Additions and Betterments Disposals/ Deemed Disposals Closing Balance August 31, 2010 Land & Land Improvements 1,450,389 88,609 57, ,596,657 Buildings 92,635,121 3,505,359 (649,276) 682, ,800 95,970,293 Furniture & Equipment 1,949,647 48, ,377 1,164,359 Computer Hardware & Software 1,327, , ,957 1,061,945 Vehicles 160, , ,319 SUBTOTAL 97,523,695 3,593,968 (649,276) 1,192,321 1,549, ,111,573 Asset Permanently Removed From Service Buildings 649, ,276 SUBTOTAL , ,276 Construction In Progress Assets Construction In Progress - 40 years 1,059,091 3,937,382 4,996,473 Pre-construction/pre-acquisition costs 1,059,091 (1,059,091) 0 SUBTOTAL 1,059, ,937, ,996,473 GRAND TOTAL 98,582,786 3,593, ,129,703 1,549, ,757,322 Opening Balance September 1, 2009 Accumulated Amortization Adjustments to Opening Balance Transfer Between Asset Class Amortization Expense Disposals/ Deemed Disposals Closing Balance August 31, 2010 Assets In Service Land Improvements 9,215 36, , ,897 Buildings 25,844,088 2,857,183 (371,287) 3,109, ,964 31,321,552 Furniture & Equipment 1,421, , , ,250 Computer Hardware & Software 774, , , ,557 Vehicles - under 1 ton 67, , ,577 Vehicles - over 1 ton SUBTOTAL 28,117,058 2,893,480 3,586,937 1,352,355 32,873,833 Assets Permanently Removed From Service Buildings - 40 years , , ,276 SUBTOTAL , ,276 GRAND TOTAL 28,117,058 2,893, ,804,926 1,352,355 33,463,109 Page 14

17 August 31, 2010 Notes to Consolidated Financial Statements Net Book Value Closing Balance at Aug. 31, Opening Balance at Sept. 1, Assets in Service Land & Land Improvements 1,526,761 1,493,486 Buildings 64,648,741 67,439,209 Furniture & Equipment - subtotal 359, ,355 Computer Hardware & Software 500, ,140 Vehicles 202,742 92,935 SUBTOTAL 67,237,740 70,107,125 Assets Permanently Removed From Service Buildings - 40 years 60,000 SUBTOTAL 60,000 Construction In Progress Assets Construction in Progress - 40 years 4,996,473 1,059,091 SUBTOTAL 4,996,473 1,059,091 GRAND TOTAL NET BOOK VALUE 72,294,213 71,166, ACCUMULATED SURPLUS Accumulated surplus consists of the following: Surplus: Working Funds 6,446,000 12,344,845 Restricted for future use by Board motion 11,472,393 1,963,160 Employee Future Benefits (12,426,910) (12,086,226) Interest to be Accrued (120,710) (123,463) School Generated funds 1,070,020 1,041,889 Invested in tangible capital assets 41,778,406 39,602,369 Not Permanently Financed Amounts (4,996,472) (1,270,630) Proceeds of Disposition (externally restricted) 312, ,665 Receivable from Province (not available) 14,249,175 0 Total Surplus 57,784,505 41,752, TRUST FUNDS Trust funds administered by the Board amounting to $298,826 ( $300,960 includes the DSAs) have not been included in the consolidated statement of financial position nor have their operations been included in the consolidated statement of operations. Page 15

18 August 31, 2010 Notes to Consolidated Financial Statements 15. ONTARIO SCHOOL BOARD INSURANCE EXCHANGE (OSBIE) The school board is a member of the Ontario School Board Insurance Exchange (OSBIE), a reciprocal insurance company licensed under the Insurance Act. OSBIE insures general public liability, property damage and certain other risks. Liability insurance is available to a maximum of $20,000,000 per occurrence. The ultimate premiums over a five year period are based on the reciprocal s and the Board s actual claims experience. Periodically, the Board may receive a refund or be asked to pay an additional premium based on its pro rata share of claims experience. The current five year term expires December 31, CONTRACTUAL OBLIGATIONS At year end, contracts are in effect for the construction of the following capital projects: Estimated Percent Project Complete Cost at year-end New Dryden Elementary School $15,995,000 31% Energy efficiency project $ 3,300,000 5% 17. CONTINGENT LIABILITIES (a) The Keewatin-Patricia District School Board is subject to individual legal action in the normal course of business. The effect of any contingent claims relating to these legal actions is not determinable at the date of the audit report. (b) The Keewatin-Patricia District School Board is a Schedule 2 employer under the Workplace Safety & Insurance Board (WSIB) of Ontario. Schedule 2 employers are self-insured for WSIB claims. The actuarial estimate of the contingent liability as at August 31, 2010 for Future Economic Loss awards that may be approved in the future for school board employees is $103, BUDGET DATA The unaudited budget data presented in these consolidated financial statements is based upon the 2010 budgets approved by the Board on June 9, Capitalization of assets, amortization, and gains and losses on disposal were not contemplated on development of the budget and, as such, have not been included. The chart below reconciles the approved budget to the budget figures reported in the Consolidated Statement of Operations. Where amounts were not budgeted for, the actual amounts for 2010 were used in order to adjust the Page 16

19 August 31, 2010 Notes to Consolidated Financial Statements budget numbers to reflect the same basis of accounting as that used to report the actual results. As the Consolidated Statement of Change in Net Debt is a new statement in financial statements, the budget figures in that statement have not been provided. Consolidated Statement of Operations For the year ended August Budget Change Restated Budget Total Revenue 81,963,585 81,963,585 EXPENSES Total Expenditure As in the ,749, Budget Less: Capital Asset Expenditure 15,904,738 Plus: Amortization Gain/loss on disposal 3,804, ,841 Total Expenses 96,749,621 84,814,648 Annual Surplus/(Deficit) (14,786,036) (2,851,063) Accumulated Surplus / (Deficit) at beginning of year Accumulated Surplus / (Deficit) at end of year 9,566,838 9,566,838 (5,219,198) 6,715, FUTURE ACCOUNTING FOR CONTRIBUTIONS USED FOR CAPITAL In the Ministry of Finance Addendum to the 2010 Ontario Budget: Ontario's Plan to Enhance Accountability, Transparency and Financial Management, the government provided direction to school boards on the accounting treatment of capital contributions. This addendum proposes that, effective the fiscal year beginning on September 1, 2010, school boards in Ontario will adopt accounting policies consistent with the Province of Ontario, which include a policy to recognize government transfers and external contributions used in the acquisition of tangible capital assets over the period that the asset is expected to provide service. This policy is to ensure consistency with the current practice of senior governments in Canada and other major broader public-sector organizations (hospitals, colleges and universities), and to ensure that school board operating surpluses or deficits are not distorted by capital grant revenues. This accounting treatment is not currently a recognized option by the Public Sector Accounting Standards Board (PSAB) and could not be implemented within these financial statements. Page 17

20 August 31, 2010 Notes to Consolidated Financial Statements 20. AMALGAMATION OF DISTRICT SCHOOL AUTHORITIES On September 1, 2009 Ontario Regulation 212/09 came into effect amalgamating The Connell and Ponsford District Area School Board (DSAs), The Upsala District School Board, and the Savant Lake Public School portion of The Northern District School Area with Keewatin-Patricia District School Board. Any restatement due to the inclusion of Public Sector Accounting Board sections also includes restatement to include the DSAs. 21. DISCLOSURE OF SUBSEQUENT EVENTS On September 1, 2010 a joint venture know as the Northwestern Ontario Student Services Consortium was formed for the purposes of providing common transportation services to their respective pupils and students located in the jurisdiction. The joint venture participants are Keewatin-Patricia District School Board, The Northwest Catholic District School Board, Kenora Catholic District School Board and Conseil Scolaire de District Catholique des Aurores Boréales. All costs for contracted home to school transportation services shall be borne by each participating board on a pro rata basis using weighted ridership. Keewatin-Patricia District School Board will maintain the books of the joint venture at this time and the staff is seconded from Keewatin-Patricia District School Board. Page 18

21 Ministry of Education Financial Statements V5 Page 1 of 133 Compliance Report CATEGORIES Administration and Governance Gross Expenses excluding internal audit Other incomes Net Expenses excluding internal audit Funding allocation excluding internal audit Overspending on Administration and Governance Compliant /Noncompliant 3,606, ,963 2,947,072 3,223,004 0 COMPLIANT

22 Ministry of Education Financial Statements V5 Page 2 of 133 Schedule 1 Consolidated Statement of Financial Position For the year ending August Col. 1 Col. 2 1 FINANCIAL ASSETS (Restated) 1.1 Cash and cash equivalents 10,880,997 14,119, Temporary investments Accounts receivable 6,362,072 7,635, Accounts receivable - Government of Ontario - Approved Capital 14,249, Long term investments 6,050, , Other 58, , TOTAL FINANCIAL ASSETS 37,601,008 22,893,692 2 LIABILITIES 2.1 Temporary borrowing 110,072 70, Accounts payable & Accrued liabilities 5,157,789 5,401, Other 984, , Net Debenture Debt, Capital Loans and Leases 30,515,807 31,563, Deferred revenue 2,276,372 1,873, Employee benefits payable 13,143,907 12,917, TOTAL LIABILITIES 52,188,704 52,365,643 3 NET DEBT -14,587,696-29,471,951 4 NON-FINANCIAL ASSETS 4.1 Prepaid Expenses 77,988 58, Inventories of supplies Tangible Capital Assets 72,294,213 71,166, TOTAL NON-FINANCIAL ASSETS 72,372,201 71,224,560 5 ACCUMULATED SURPLUS (DEFICIT) 57,784,505 41,752,609 Signed On Behalf Of The Board: Signature of Chief Executive Officer Signature of Chair of the Board

23 Ministry of Education Financial Statements V5 Page 3 of 133 Schedule 1.1 Consolidated Statement of Operations For the year ended August Budget Actual Actual Col. 1 Col. 2 Col. 3 1 REVENUES (Restated & Unaudited) (Restated) 1.1 Provincial grants - Grants for Student Needs 52,517,185 71,702,817 55,341, Provincial grants - Other 1,517,618 2,435,030 3,050, Local taxation 17,926,954 15,816,030 17,632, School generated funds 2,500,000 2,538,350 2,724, Federal grants & fees 5,280,963 5,970,615 5,211, Investment income 73, , , Other revenues - School boards 1,168,645 1,694,199 1,270, Other fees & revenues 978,935 1,801,335 1,851, TOTAL REVENUE 81,963, ,086,537 87,469,761 2 EXPENSES 2.1 Instruction 58,067,486 59,175,100 58,437, Administration 3,917,508 3,619,132 4,251, Transportation 5,515,947 5,609,640 5,115, Pupil Accommodation 13,906,110 14,060,730 13,960, School generated funds 2,500,000 2,510,219 2,764, Other 907,597 1,079,820 1,597, TOTAL EXPENSES 84,814,648 86,054,641 86,127,762 3 Annual Surplus/(Deficit) -2,851,063 16,031,896 1,341, Accumulated Surplus / (Deficit) at beginning of year 9,566,838 41,752,609 40,410, Accumulated Surplus / (Deficit) at end of year 6,715,775 57,784,505 41,752,609

24 Ministry of Education Financial Statements V5 Page 4 of 133 Schedule 1.2 Consolidated Statement of Cash Flow For the year ended August Col. 1 Col. 2 1 OPERATING TRANSACTIONS (Restated) 1.1 Annual Surplus (Deficit) 16,031,896 1,341,999 2 Sources and (Uses): 2.1 Non-cash items including amortization, write downs and gain/loss on disposal 3,969,765 2,210, (Increase) Decrease in temporary investments (Increase) Decrease in accounts receivable -12,975,612-1,971, (Increase) Decrease in other financial assets 100,280 73, Increase (Decrease) in Accounts payable & Accrued liabilities -243, , Increase (Decrease) in Other liabilities 445,718-1,934, Increase (Decrease) in deferred revenues 402, , Increase (Decrease) employee benefits payable 226, , (Increase) Decrease in prepaid expenses -19,644 2, (Increase) Decrease in inventories of supplies Cash provided by (applied to) operating transactions 7,937, ,124 3 CAPITAL TRANSACTIONS 3.1 Proceeds on sale of tangible capital assets 31,938-3, Cash used to acquire tangible capital assets -5,129,703-2,614, Cash provided by (applied to) capital transactions -5,097,765-2,618,351 4 INVESTING TRANSACTIONS 4.1 (Increase) Decrease in long term investments -5,070,184 9,036, Cash provided by (applied to) investing transactions -5,070,184 9,036,092 5 FINANCING TRANSACTIONS 5.1 Long term liabilities issued 0 1,028, Increase (Decrease) in temporary borrowing 39,798-12, Debt repaid and sinking fund contributions -1,048, , Cash provided by (applied to) financing transactions -1,008,242 81,877 6 CHANGE IN CASH AND CASH EQUIVALENTS -3,238,203 6,037,494 7 Opening Cash and Cash Equivalents 14,119,197 8,081,703 8 Closing Cash and Cash Equivalents 10,880,994 14,119,197

25 Ministry of Education Financial Statements V5 Page 5 of 133 Schedule 1.3 Consolidated Statement of Change in Net Debt For the year ended August Budget Actual Actual Col. 1 Col. 2 Col. 3 (Note 1) (Restated) 1 Annual Surplus/(Deficit) N/A 16,031,896 1,341,999 2 TANGIBLE CAPITAL ASSET ACTIVITY 2.1 Acquisition of tangible capital assets N/A -5,129,703-2,637, Amortization of tangible capital assets N/A 3,804,926 2,952, Gain/Loss on sale of tangible capital assets N/A 164, , Proceeds on sale of tangible capital assets N/A 31, Less: Proceeds allocated to deferred revenue (gains on sale) N/A Write-downs of tangible capital assets N/A 0-736, Total tangible capital asset activity N/A -1,127, ,572 3 OTHER NON-FINANCIAL ASSET ACTIVITY 3.1 Acquisition of supplies inventories N/A Acquisition of prepaid expenses N/A -77,988-58, Consumption of supplies inventories N/A Use of prepaid expenses N/A 58,344 63, Total other non-financial asset activity N/A -19,644 5,626 4 (Increase) decrease in net debt N/A 14,884, , Net debt at beginning of year N/A -29,471,951-30,116, Net debt at end of year N/A -14,587,697-29,471,951 Note 1: Boards are not required to complete the Budget column.

26 Ministry of Education Financial Statements V5 Page 6 of 133 Schedule 3 - Capital Expenditures Expenditure Categories (as used in Uniform Code of Accounts) Capitalized Expenditures (ie.additions) Col.1 1 Total Instruction 420,232 2 Total Administration 31,540 3 Total Transportation 0 4 Pupil Accommodation 4.1 Sch. Oper./Maint School Renewal 369, Good Places to Learn New Pupil Places, Best Start Growth Schools, PCS, Cap. Trans. Adj., PTR, Cap. Prior. 3,937, Other Cap./Appr.Debt 202, Full Day Kindergarten Accommodation Energy Efficient Schools 168, Total Pupil Accommodation 4,677,930 5 Total Other 0 6 TOTAL 5,129,702

27 Ministry of Education Financial Statements V5 Page 7 of 133 Schedule 3A - Good places to learn (GPL) expenditures and financing costs Up to August 31, 2009 Eligible GPL amount (Note 4) September 1, Approved GPL August 31, 2010 amount (Note3) Expenditure Col. 1 Col. 2 Col. 3 Col Expenditure on GPL stage 1 projects 4,196, ,196,161 4,196,161...Report expenditures in Col. 1 started from March 18, Expenditure on GPL Stage 2 Projects 1,811, ,811,632 1,811,632...Report expenditures in Col. 1 started from January 1, Expenditure on GPL Stage 3 Projects 1,028, ,028,679 1,028,679...Report expenditures in Col. A started from January 1, Expenditure on GPL Stage 4 Projects , Report expenditures in Col. A started from January 1, Total GPL Expenditures 7,036, ,036, Long term financed GPL expenditure 7,036, Short term financed GPL expenditure 0...(Item item 1.2.1) Internal borrowing 1.3 Borrowing in 2009/10 from internal funds related to expenditures reported on Line Report daily weighted average amount borrowed from internal funds to pay for project costs (note 1) Ministry prescribed interest rate for the period Imputed interest /10 amount recognized for funding 0 (Item 1.3 X Item 1.4 / 100) External Borrowing 2.0 Actual short term interest cost incurred in 2009/ Is financing negotiated within the funding guideline i.e. 3 months banker's acceptance + 75 basis points or less 2.2 If no, report interest costs in excess of 3 months banker's acceptance + 75 basis points (If Y, then Item 2.2 is 0) (Note2) (Where board has responded N to item 2.1, the excess has to be calculated) No Amount of short term interest recognized for funding 0 (Item 2.0 less Item 2.2) 2.4 Total funding for short term interest and imputed interest on GPL projects...(item Item 1.5) 0 Note 1: Borrowing from internal funds - calculate the daily weighted average amount based on the calculations as shown in the example below: Col. 1 Col. 2 Col. 3 Col /10 Date of Internal Borrowing Amount Borrowed # of days to Aug. 31/10 Weighted Borrowing col. 2 X col. 3 / 365 March 31, , ,000 April 15, , ,000 Sept. 15, , ,452 June 15, 2010 (Note 1a) (1,400,000) 77 (168,767) Total 610,685 Note 1a: Sum of the internal borrowing in 2009 ($800,000) x Col.3/365 Note 2: The amount of the interest cost in excess of BA + 75 basis points may be determined based on the average funds borrowed for the GPL projects. The average borrowing could be calculated using the approach in note 1 or other approaches if the boards can determine any amount more reflective of the weighted average. Where the financing is based on, for example, BA + 82 points, then the excess is calculated by multiplying the actual interest cost (Item 2.0) by 0.07% divided by the average interest rate (BA + 82). Note 3: Table 18, Grant Reg. Note 4: Eligible amount equals to the lesser of approved GPL amount at Col. 3 and the sum of construction costs at Col. 1 and Col. 2

28 Ministry of Education Financial Statements V5 Page 8 of 133 Schedule 3C - Tangible Capital Asset Continuity Schedule COST Opening Balance September 1, 2009 Adjustments to Opening Balance Transfers Between Asset Class* Additions and Betterments Disposals/Deemed Disposals Transfers to/from CIP (In is +; Out is -) * Write Downs Closing Balance August 31, 2010 Closing Balance from Asset Upload Data Assets In Service ,173,944 28, ,202,056 1,202,056 Land & Land Improvement with Infinite Lives Land Improvements 276,445 60, , , ,601 Buildings - 40 years 92,205,521 2,152, , , , ,185,641 94,185,641 Other Buildings 0 993, , ,149 Portable Structures 429, ,600 2, ,503 Error Equipment - 5 years 1,842, , ,377 1,057,076 Equipment - 10 years Equipment - 15 years First-time equipping - 10 years 107, ,283 Furniture 1,949, , ,377 1,164,359 Furniture & Equipment - subtotal Computer Hardware 1,098, , , ,885 Computer Software 229, , ,060 Vehicles - under 1 ton 160, , ,319 Vehicles - over 1 ton SUBTOTAL 97,523,694 3,593,968 1,192,321 1,549, ,111, Asset Permanently Removed From Service Buildings - 40 years , , ,276 SUBTOTAL 649, Construction In Progress Assets Construction In Progress - 40 years Construction In Progress - 20 years Construction In Progress - Portables Pre-construction/preaquisition costs 0 1,059,091 3,937, ,996,473 4,996, ,059,091-1,059,091 SUBTOTAL 1,059, ,937, ,996,473 TOTAL 98,582,785 3,593,968 5,129,703 1,549, ,757,322 Capital Leased Assets Land 0 Buildings 0 Other 0 TOTAL Leasehold Improvements Land Improvements Buildings Other TOTAL GRAND TOTAL 98,582,785 3,593, ,129,703 1,549, ,757,322 Notes: * The transfers column should net to zero.

29 Ministry of Education Financial Statements V5 Page 9 of 133 Schedule 3C - Tangible Capital Asset Continuity Schedule Accumulated Amortization Opening Balance September 1, 2009 Adjustments to Opening Balance Transfer Between Asset Class * Amortization Expense Write Downs Disposals/Deemed Disposals Closing Balance August 31, 2010 Closing Balance from Asset Upload Data Assets In Service Land Improvements 9,215 36, , ,897 69,897 Buildings - 40 years 25,510,630 1,514, ,287 3,084, ,964 29,620,312 29,620,312 Other Buildings 0 983, , ,399 Portable Structures 333, ,600 23, ,841 Error Equipment - 5 years 1,356, , , ,152 Equipment - 10 years 0 Equipment - 15 years 0 First-time equipping - 10 years 64, , ,098 Furniture 0 Furniture & Equipment - subtotal Assets Permanently Removed From Service 1,421, , , ,250 Computer Hardware 614, , , ,491 Computer Software 160, , , ,066 Vehicles - under 1 ton 67, , ,577 Vehicles - over 1 ton 0 SUBTOTAL 28,117,058 2,893,480 3,586, ,352,355 32,873, Buildings - 40 years , , , ,276 SUBTOTAL , ,276 Construction In Progress Assets Construction in Progress - 40 years Construction in Progress - 20 years Construction in Progress - Portables Pre-construction/preacquisition costs SUBTOTAL TOTAL 28,117,058 2,893,480 3,804, ,352,355 33,463,109 Capital Leased Assets Land Buildings 0 0 Other 0 0 Total 0 Leasehold Improvements Land Improvements 0 Buildings 0 Other 0 TOTAL 0 GRAND TOTAL 28,117,058 2,893, ,804, ,352,355 33,463,109 Notes: * The transfers column should net to zero.

30 Ministry of Education Financial Statements V5 Page 10 of 133 Schedule 3C - Tangible Capital Asset Continuity Schedule Net Book Value Net Book Value Assets in Service Closing Balance at Aug. 31 Opening Balance at Sept. 1 Proceeds of Disposition Gain/(Loss) on Disposal Land 1,202,056 1,202, Land Improvements 324, , Buildings - 40 years 64,565,329 67,333,442 31,938-53,898 Other Buildings - 20 years 8,750 9, Portable Structures 74,662 96, Equipment - 5 years 326, , Equipment - 10 years Equipment - 15 years First-time equipping - 10 years 32,185 42, Furniture Furniture & Equipment - subtotal 359, , Computer Hardware 468, , ,943 Computer Software 31,994 69, Vehicles - under 1 ton 202,742 92, Vehicles - over 1 ton SUBTOTAL 67,237,740 70,107,125 31, ,841 Assets Permanently Removed From Service Buildings - 40 years 60, SUBTOTAL 60, Construction In Progress Assets Construction in Progress - 40 years 4,996,473 1,059,091 Construction in Progress - 20 years 0 0 Construction in Progress - Portables 0 0 Pre-acquisition costs 0 0 SUBTOTAL 4,996,473 1,059,091 TOTAL 72,294,213 71,166,216 31, ,841 Capital Leased Assets Land Buildings Other Total Leasehold Improvements Land Improvements 0 0 Buildings 0 0 Other 0 0 TOTAL 0 0 GRAND TOTAL NET BOOK VALUE 72,294,213 71,166,216 31, ,841

31 Ministry of Education Financial Statements V5 Page 11 of 133 Schedule 4 - Statement of Outlay For Performing of Duties of A Municipal Council In Territory Without Municipal Organization (Recoverable through levy on assessment in the applicable areas) Col.1 Col.2 Col.3 Name of Area Net Expense of a Recreation Committee Net Expense of a public library Total (Col.1+Col.2) TOTAL 0 0 0

32 Ministry of Education Financial Statements V5 Page 12 of 133 Schedule 5 - Detail of Accumulated Surplus/(Deficit) For the year ended August 31, 2010 Balance at Sept In-Year Increase Subtotal at Aug Appropriation for supported capital Balance at Aug 1, 2009 (+) / Decrease (-) 31, 2010 expenditures at August 31, , 2010 Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 1 Available for Compliance - Unappropriated 1.1 Total Operating Accumulated Surplus 12,344,845-5,898,845 6,446,000 6,446, CPP & EI Restatement Total Unappropriated 12,344,845-5,898,845 6,446,000 6,446,000 2 Available for Compliance - Internally Appropriated 2.1 Retirement Gratuities 935,781-96, , , WSIB Pupil Accommodation (NPP) - Deferred Revenue Pupil Accommodation Debt Reserve (NPP portion) 2.4 Pupil Accommodation Debt Reserve (School Renewal portion) 2.5 Pupil Accommodation Debt Reserve - other Other Purposes - Operating (please specify): 2.6 Employee Benefits 35,201-19,880 15,321 15, Utilities Fluctuation 352,179 1, , , Student Achievement & Support 0 1,485,520 1,485,520 1,485, NSRA 189, , , Business Services 0 573, , ,387 Other Purposes - Capital (please specify): 2.11 Various Cap Reserves 0 3,515,000 3,515,000 3,515, QEDHS Capital Reserve 0 4,000,000 4,000,000 4,000, Pickle Lake Cap Reserves 450, , , Upsala Cap Reserve 0 50,824 50,824 50, Total Internally Appropriated 1,963,160 9,509,233 11,472, ,472,393 3 Total Accumulated Surplus / (Deficit) Available for Compliance (Sum of lines 1.3 and 2.16) 14,308,005 3,610,388 17,918, ,918,393 4 Unavailable for Compliance 4.1 Employee Future Benefits -12,086, ,684-12,426,910-12,426, Interest to be Accrued -123,463 2, , , Vacation Accrued School Generated Funds 1,041,889 28,131 1,070,020 1,070, Net TCA 71,166,216 1,127,997 72,294,213 72,294, Debt -31,563,847 1,048,040-30,515,807-30,515, Not Permanently Financed Amounts -1,270,630-3,725,842-4,996,472-4,996, Receivable from Province re: Capital Wrap-Up 14,249,175 14,249, Portion of Proceeds of Disposition related to net book value of the disposed assets 280,665 31, , , Committed Capital Projects Total Externally Appropriated 27,444,604-1,827,667 25,616,937 14,249,175 39,866,112 5 Total Accumulated Surplus/(Deficit) 41,752,609 1,782,721 43,535,330 14,249,175 57,784,505 Note 1: The stratification of accumulated surplus into available and unavailable for compliance will not be used in any compliance calculations for the year, since the new compliance model begins only on September 1, This schedule was included to facilitate the transition to the new model starting in with the fiscal year.