CANADIAN CANCER SOCIETY - NOVA SCOTIA DIVISION

Transcription

1 Financial Statements of CANADIAN CANCER SOCIETY - NOVA SCOTIA DIVISION

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3 Statement of Financial Position January 31, 2011, with comparative figures for 2010 Assets Current assets: Cash $ 872,437 $ 535,072 Short-term investments (note 2) 3,848,245 6,235,976 Accounts receivable 129, ,089 Prepaid expenses 124,963 98,938 Inventories 36,075 26,633 5,010,961 7,036,708 Long-term investments (note 3) 3,030, ,330 Capital assets (note 4) 1,843,072 1,862,375 Liabilities, Deferred Contributions and Resources $ 9,884,614 $ 9,855,413 Current liabilities: Accounts payable and accrued liabilities $ 798,580 $ 398,616 Obligation for post-retirement benefits other than pensions (note 5) 868, ,772 1,666,746 1,203,388 Deferred contributions (note 6) 400, ,895 Resources: Externally restricted (note 7) 3,141,718 2,974,942 Invested in capital assets (note 8) 1,843,072 1,862,375 Internally restricted (note 9) 2,106,065 2,380,764 Unrestricted 726, ,049 7,817,066 8,187,130 Commitments (notes 10 and 11) See accompanying notes to financial statements. On behalf of the Board: $ 9,884,614 $ 9,855,413 Director Director 1

4 Statement of Operations, with comparative figures for 2010 Operating Fund Externally Restricted Resources Actual Actual Actual Actual Revenue Annual giving $1,586,467 $1,752,391 $ $ Relay For Life 2,710,628 2,646,631 Special events 754, ,588 Tributes 500, ,414 Planned and major gifts 558,624 1,036,425 Capital campaign 243,711 9,930 6,110,266 6,478, ,711 9,930 Investment income and interest: Restricted for lodge 46,270 41,470 26,897 20,560 Unrestricted 68,072 98,592 Change in market value of investments (39,223) (52,743) 135,301 5,770 75,119 87, ,198 26,330 Other income: Lodge service fees 99, ,105 Miscellaneous revenue 5,645 20,290 Grants 116, , , ,008 $6,406,194 $6,899,776 $405,909 $36,260 2

5 Operating Fund Externally Restricted Resources Actual Actual Actual Actual Expenditures Prevention $ 682,527 $ 726,994 $ $ Advocacy 427, ,069 Research 1,061, ,766 Information 510, ,820 Support for people living with cancer (Schedule 1) 1,231,638 1,282, ,133 Management and general (note 13) 507, ,380 Annual fundraising 2,158,952 2,159,728 Capital campaign 363, ,000 Total expenditures 6,579,759 6,607, , ,000 Increase (decrease) in resources $ (173,565) $ 292,418 $(196,499) $(255,740) See accompanying notes to financial statements. 3

6 Statement of Changes in Resources, with comparative figures for 2010 Externally Invested in Internally restricted capital assets restricted (note 7) (note 8) (note 9) Unrestricted Total Total Resource balances, beginning of year $2,974,942 $1,862,375 $2,380,764 $969,049 $8,187,130 $8,150,452 Decrease in Externally Restricted Fund resources (196,499) (196,499) (255,740) Increase (decrease) in Operating Fund resources (113,380) (60,185) (173,565) 292,418 Additions to capital assets 94,077 (94,077) Transfers (notes 7 and 9) 363,275 (274,699) (88,576) Resource balances, end of year $3,141,718 $1,843,072 $2,106,065 $726,211 $7,817,066 $8,187,130 See accompanying notes to financial statements. 4

7 Statement of Cash Flows, with comparative figures for 2010 Cash provided by (used in): Operations: Increase (decrease) in resources $ (370,064) $ 36,678 Items not involving cash: Amortization of capital assets 113, ,195 Post-retirement benefits other than pensions expense 105,411 71,771 Current period change in market value of investments (96,078) 46,973 Change in non-cash operating working capital: Decrease (increase) in accounts receivable 10,848 (19,843) Decrease (increase) in prepaid expenses (26,025) 60,483 Decrease (increase) in inventories (9,442) 7,766 Increase (decrease) in accounts payable and accrued liabilities 399,964 (103,330) Decrease in obligation for post-retirement benefits other than pensions (42,017) (38,605) Net decrease in deferred contributions related to expenses of future periods (64,093) (103,930) 21, ,158 Financing and investing activities: Purchase of investments (7,415,466) (8,789,997) Proceeds from sale of investments 7,825,024 8,470,619 Purchase of capital assets (94,077) (61,806) 315,481 (381,184) Increase (decrease) in cash 337,365 (263,026) Cash, beginning of year 535, ,098 Cash, end of year $ 872,437 $ 535,072 See accompanying notes to financial statements. 5

8 The Canadian Cancer Society (the "Society") is a national, community-based organization of volunteers, whose mission is the eradication of cancer and the enhancement of the quality of life of people living with cancer. The Society achieves its mission through prevention, advocacy for healthy public policy, research, information and support for people living with cancer. These efforts are supported by volunteers and staff and funds raised in communities across Canada. The vision of the Nova Scotia Division (the "Division") is to create a world where no Nova Scotian fears cancer. These financial statements reflect the activities of the Canadian Cancer Society - Nova Scotia Division, being one of ten divisions of the Society. The Division is a registered charity under the Income Tax Act and, accordingly, is exempt from income taxes provided certain requirements under the Income Tax Act are met. 1. Significant accounting policies: The financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. The preparation of financial statements in conformity with Canadian 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 financial statements and revenue and expenditures for the period reported. Actual results could differ from those estimates. (a) Revenue recognition: (i) Revenue recognition: The Division follows the restricted fund method of accounting for contributions, which includes designated donations from the public, bequests and Government support. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. 6

9 1. Significant accounting policies (continued): Externally restricted contributions recognized in the Operating Fund are recognized as revenue in the year in which the costs of the related services are incurred. Externally restricted contributions recognized in the Capital Campaign Fund and endowment contributions are recognized as revenue in the year in which the revenue is received. Contributions restricted for the purchase of capital assets, other than those included in the Capital Campaign Fund are deferred and amortized into revenue on a straight-line basis, at a rate corresponding with the amortization rate for the related capital assets. The Internally Restricted Fund reports resources that have been allocated for specific purposes by the Board of Directors of the Division. Restricted investment income is recognized as revenue in the Operating Fund in the year in which the related services are recognized, otherwise it is recognized as revenue in the externally restricted resources fund. Unrestricted investment income is recognized as revenue when earned. Revenue from annual campaign and in memoriam donations is recognized on a cash basis, with no accrual being made for amounts pledged but not received. The Division is the beneficiary under various wills and trust agreements. The total realizable amounts are not at present readily determinable. Upon receipt, designated bequests are deferred and recognized as revenue when the expenses are incurred in accordance with the conditions of the designation. Special events revenue is recognized on completion of the event and is presented on a gross basis. Third party independent fundraising events are recorded at amounts received. Proceeds from life insurance policies and life annuities which vest irrevocably with the Society are recognized as revenue when the proceeds are received. Gifts in kind are recognized as revenue if they are in accordance with the criteria set out by Canada Revenue Agency, have documentation that satisfactorily establishes the purchase price of the gift and is something the Division would normally acquire. (ii) Investment and sundry income: Investment and sundry income is recorded on the accrual basis. 7

10 1. Significant accounting policies (continued): (iii) Expenditures: Fellowships and grants may be awarded and contracts entered into for a period covering more than one fiscal year. The statement of financial activities reflects only that portion of fellowships, grants or contracts payable during the current fiscal year. Expenditures are charged to cancer control priorities which include prevention, advocacy, research, information and support for people living with cancer, as well as fundraising or management and general according to the activity that they benefit. Certain expenditures benefit more than one cancer control priority and accordingly, are prorated on a predetermined basis. A policy exists that enforces annual review of the basis of allocation for all expenditures. The predetermined basis of allocation may be revised according to circumstances prevailing at any given time. (b) Short and long-term investments: Effective February 1, 2007, investments are classified as held for trading and stated at fair value. The change in market value of investments, being the difference between the fair values at the beginning and end of each year, is included in investment income. Fair values of fixed income securities and short-term notes are determined using year-end quoted market prices. Transaction costs related to financial assets or financial liabilities classified as held for trading are recognized in net income in the year incurred. (c) Prepaid expenses: Prepaid expenses consist primarily of prepaid services, fundraising materials and other supplies maintained at the Division and are recorded at cost. (d) Inventories: Inventories, which are carried at the lower of cost and replacement cost, include pamphlets and educational materials. 8

11 1. Significant accounting policies (continued): (e) Capital assets: Capital assets purchased by the Division are recorded at cost and those donated to the Division are recorded at their fair value at the date of contribution when fair value can be reasonably estimated, otherwise, they are recorded at nominal value. Capital assets are amortized on a straight-line basis over the following periods: Asset Basis Rate Lodge Straight-line 15 years Computer hardware, software and other equipment Straight-line 3 years Furniture and fixtures Straight-line 4 years (f) Employee future benefit plans: The Society provides certain benefits to retired employees and their spouses. The benefits include medical services, life insurance and extended health care benefits. The cost of these benefits is actuarially determined using the projected benefit method pro-rated on service and management's best estimate of salary escalation, retirement ages of employees and expected health care costs. This benefit plan is not funded. The Society offers a defined benefit and defined contribution pension plan, which covers substantially all employees of the Society, its provincial divisions and affiliates. The defined benefit plan provides pensions based on length of service and final average earnings. The defined contribution plan provides pensions based on the amount of contributions and the rate of return on such contributions. Pension benefits and assets are for all members of the plan and are not segregated by division. The Division's contributions to the pension plan, sponsored by the Society, are expensed when paid. (g) Deferred revenue: Deferred revenue recognized in the Operating Fund represents the deferred portion of investments in government-sponsored projects and designated donations. 9

12 1. Significant accounting policies (continued): (h) Resources: Externally restricted Invested in capital assets Internally restricted Unrestricted - Funds for which externally imposed stipulations specify how resources must be used, limited to endowments and capital campaigns. - Resources invested in capital assets - Resources allocated for specific purposes by the Division - Resources available for general purposes. (i) Direct fundraising costs, cancer control expenditures and volunteer services: (i) Direct fundraising costs: Direct fundraising costs are expensed as incurred to support annual fundraising activities. (ii) Cancer control expenditures: Cancer control is the basic, broad category that describes what the Canadian Cancer Society does to address its mission and visionary outcomes - its roles within the cancer community. The cancer control expenditure categories embody the five priorities of the Canadian Cancer Society - prevention, advocacy, research, information and support for people living with cancer. The priorities within the cancer control expenditure categories are the local roles, or the ways we do business, in order to achieve board outcomes. These priorities guide the Canadian Cancer Society, at all levels of the organization, where to place its resources and effort. a) Prevention: Programs in this area are related to stopping cancer before it starts (primary prevention) and early detection of cancer (secondary prevention). Prevention key priorities include tobacco control, UV protection, screening, healthy eating and physical activity. 10

13 1. Significant accounting policies (continued): b) Advocacy: Advocacy focuses on strategies to affect change in public policies that influence cancer control. Advocacy priorities include: tobacco control, patients access to cancer screening and treatment, exposure to environmental/occupational carcinogens and health systems reform. c) Research: Research includes costs to fund and support research. d) Information: Cancer information involves providing cancer information to Canadians to raise awareness, increase knowledge and affect behaviour change. It includes activities such as the Cancer Information Service, national integrated website, and the distribution of print materials related to all aspects of cancer from prevention to pallitation. e) Support for people living with cancer: Support for people living with cancer involves providing support services or programs for people living with cancer and their family and friends. A program or service consists of an organized group or set of activities designed to achieve improved quality of life. Examples include: CancerConnection, The Lodge That Gives, Camp Goodtime and linking cancer patients with other sources of support and other related similar and unique programs or activities. f) Management and general: Management and general expenditures are incurred to operate the organization and its programs in a cost-effective manner while maximizing all opportunities to further the Society s mission. The Society allocates certain of its management and general expenditures to the priorities of cancer control or to fundraising by identifying the appropriate basis of allocating each component expense and applies that basis consistently each year. General support expenditures are allocated on the basis of full-time equivalents. Corporate governance expenses including corporate level strategic planning, compliance and regulatory reporting and corporate financial reporting are not allocated. 11

14 g) Fundraising: Fundraising expenditures are incurred in the generation of donation revenue to provide the means to further the Division's mission. Included in fundraising expenditures are costs related to residential canvassing, special events, in memoriam and gift planning activities. h) Volunteer services: The Division's programs benefit from substantial services in the form of volunteer time. Since these invaluable donated services are not purchased by the Division, they are not recorded in these financial statements. 2. Short-term investments: Short-term Investments are recorded at fair value, based on year-end quoted market prices, maturing or redeemable at various dates not exceeding 36 months at interest rates ranging from 1.25% to 6.0% ( % to 4.0%). The Society s investment policy stipulates investments be made in fixed income instruments and that the fixed income instruments shall be primarily Canadian dollar debt with no more than 5% of the total value of fixed income invested in debt denominated in foreign currency. Fixed income investments purchased must be investment grade debt and rated at least BBB by PC Bond (DEX Universe Bond Index). The value of fixed income securities will generally rise if interest rates fall and fall if interest rates rise. 12

15 3. Long-term investments: The Society has long-term investments in a managed portfolio of pooled funds. These investments are recorded at fair value based on year-end quoted market prices. Long-term investments in pooled funds consist of the following: Cost Fair value Cost Fair value Money market $ 19,618 $ 20,047 $ 8,193 $ 8,193 Fixed income 1,641,595 1,696, , ,586 Canadian equity 819, , , ,712 Global equity 410, , , ,839 $ 2,891,127 $ 3,030,581 $ 950,561 $ 956,330 The interest rates for fixed income securities vary from 1.0% to 9.0% ( % to 9.0%) and the maturity dates range from June 2011 to June 2067 ( October 2010 to June 2067). The Society s investment policy stipulates except for Canadian federal or provincial government securities, not more than 7% of the total value of the portfolio be invested in securities of any one issuer and fixed income investments purchased be investment grade debt and rated at least BBB by PC Bond (DEX Universe Bond Index). Any holdings in a security within an equity portfolio must not exceed the weight of the security within the appropriate equity portfolio index plus 5%. The risks associated with the pooled funds are the risks associated with the securities in which the pooled funds are invested. The value of equity securities changes with stock market conditions which are affected by general economic and market conditions. The value of securities will vary with developments within the specific companies or governments which issue the securities. The value of fixed income securities will generally rise if interest rates fall and fall if interest rates rise. Changes in interest rates may also affect the value of equity securities. The value of securities denominated in a currency other than Canadian dollars will be affected by changes in the value of the Canadian dollar in relation to the value of the currency in which the security is denominated. 13

16 4. Capital assets: Cost Accumulated amortization Net book value Net book value Land $ 1,132,172 $ $ 1,132,172 $ 1,132,172 Lodge 3,532,323 2,877, , ,851 Computer hardware, software and other equipment 291, ,268 47,214 28,322 Furniture and fixtures 345, ,414 9,013 34,030 $ 5,301,404 $ 3,458,332 $ 1,843,072 $ 1,862,375 Amortization expense for the year is $113,380 ( $160,195). 5. Employee future benefit plans: (a) Pension Plan: Employer contributions to the defined benefit and defined contribution provisions for the period were $124,657 and $16,812 ( $112,655 and $14,681), respectively. The most recent actuarial valuation of the registered pension plan for funding purposes was as of December 31, 2009 and the next required valuation was December 31, The results of the actuarial valuation as of December 31, 2010 were not available at the time these financial statements were completed. Based on the December 31, 2009 actuarial valuation, there were unfunded liabilities of $11,614,300 and a solvency deficiency of $17,672,500 with respect to the Society s defined benefit pension plan. The Society is making the required amortization payments to fund the unfunded liability and the solvency deficiency. (b) Obligation for post retirement benefits other than pensions: Post retirement benefits other than pensions have been actuarially determined using the projected benefit method prorated on services. The expense recognized for the year ended January 31, 2011 for post retirement benefits other than pensions is $105,411 ( $71,771) The accrued benefit obligation at January 31, 2011 is $1,224,397 ( $1,146,280), and the liability recorded is $868,166 ( $804,772). The difference is largely related to unamortized gains and losses which will be accrued over time. There are no assets in the plan and, therefore, this plan is unfunded. 14

17 5. Employee future benefit plans (continued): The amount of premiums and benefits paid during the year were $42,017 ( $38,605). The last actuarial valuation of post-retirement benefits other than pensions was performed as at January 31, The next actuarial valuation will have to be performed no later than January 31, The significant actuarial assumptions adopted in measuring the Society's accrued benefit obligation for both pension and post-retirement benefits are as follows: Post-retirement Post-retirement Pension benefits Pension benefits Accrued benefit obligation: Discount rate 5.25% 5.25% 5.25% 5.25% Rate of compensation increase 2.00% 3.50% 3.50% 3.50% Pension and benefit costs: Discount rate 5.25% 5.25% 7.5% 7.5% Rate of compensation increase 3.50% 3.50% 3.5% 3.5% Increase in health care costs is assumed to be as follows: Prescription drugs 10% in 2011 declining to 6% in 2029 Hospital, dental care, and other covered expenses 5% in 2011 declining to 3% in 2029 Vision care no increase 15

18 6. Deferred contributions: Expenses of future periods: Deferred contributions related to expenses of future periods represent unspent externally restricted grants and designated donations: Balance, beginning of period $ 464,895 $ 568,825 Less amount recognized as revenue in the period (229,570) (283,235) Add amount received related to future periods 165, ,305 $ 400,802 $ 464, Externally restricted resources: Balance Change Transfer beginning in to Balance of year resources resources end of year Externally restricted resources: Lodge Endowment $ 2,697,150 $ 162,198 $ $ 2,859,348 Endowments 171, ,233 Capital Campaign 106,559 (358,697) 363, ,137 $ 2,974,942 $ (196,499) $ 363,275 $ 3,141,718 During 2011, nil ( $500,000) was transferred to Lodge Endowments. The Endowment Funds are externally restricted resources subject to externally imposed restrictions stipulating that the principal remain intact. 16

19 8. Invested in capital assets: (a) At January 31, 2011, the invested in capital assets balance was equal to the net book value of capital assets. (b) The change in capital assets is comprised of the following amounts: Decrease in resources: Amortization of capital assets $ (113,380) $ (160,195) Net change in invested in capital assets: Additions to capital assets $ 94,077 $ 61, Internally restricted resources: Balance Decrease Balance beginning in Transfers to end of of year resources resources year Lodge Reserve $ 100,509 $ $ $ 100,509 Operating Reserve 1,325,000 40,000 1,365,000 Marketing Strategy 253,655 (23,342) 230,313 Capital Campaign 565,040 (363,275) 201,765 Opportunity Fund Reserve 100, ,000 Special Reserve Fund 36,560 71, ,478 $ 2,380,764 $ (386,617) $ 111,918 $ 2,106,065 During 2005, the Board set aside an operating reserve to not fall below 20% of the prior year's functional expenses. The reserve would provide continued funding of operations if the Division were to experience a temporary deficit. During 2011, the Board approved a motion to set aside nil (2010 $580,000) for the Capital Campaign reserve. During 2011, $363,275 ( $292,000) was transferred from the internally restricted Capital Campaign Fund to the externally restricted Capital Campaign Fund to fund campaign administration expenditures incurred during the year. 17

20 9. Internally restricted resources (continued): The Special Reserve Fund was established to enable the Society to set aside funds to support future pension contributions. During 2011, $56,760 ( $36,120) was transferred to the Special Reserve Fund for these contributions, in addition to $1,653 ( $440) in interest. A further $13,505 was contributed to support the Society s Intervener status in a constitutional challenge to prohibit the visible display of tobacco products at point of purchase. 10. Commitments: The Division rents premises and office equipment under operating leases. In addition, the Division has committed funding towards two external programs. The approximate minimum aggregate annual commitments are as follows: Leases Programs Total 2012 $ 59,324 $ 60,000 $ 119, ,905 50,000 81, Related party transactions: The Division purchases brochures, reimburses costs and contributes resources to the Society as follows: Purchases of brochures and other materials $ 196,547 $ 231,337 Contributions for research 776, ,000 National office / Pan-Canadian Initiatives 509, ,487 Contributions to cancer information service 102, ,038 Cancer Connection (Ontario Division) 16,420 10,665 Smokers Help Line (Ontario Division) 31,200 31,023 Reimbursed costs to (from) National office, net (1,914) (4,536) $ 1,629,943 $ 1,584,014 18

21 11. Related party transactions (continued): The Society conducts fundraising activities and allocates a portion of funds received to the Division as follows: Contributions received $ 164,972 $ 165,032 Research commitments: The Board of Directors approved the Division's funding commitment to the Society for the next three years as follows: 2012 $ 676, , ,000 These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by related parties. Accounts receivable include $65,446 ( $9,552) and accounts payable include $99,766 ( $60,229) due from/to the National Office. 12. Financial instruments: The Division's financial instruments consist of cash, accounts receivable, short and long-term investments and accounts payable and accrued liabilities. The carrying values of accounts receivable, accounts payable and accrued liabilities approximate fair values due to their short-term nature. The Division records its cash and investments at fair values (notes 2 and 3). The Division did not enter into any derivative financial arrangements for hedging or speculative purposes. 19

22 13. Allocation of management and general expenditures: Human resources, finance, information technology and facilities expenditures totaling $377,944 ( $376,608) have been allocated as follows: Prevention $ 48,171 $ 54,147 Advocacy 34,043 29,115 Information 26,460 23,519 Support for people living with cancer 80,338 82,808 Fundraising 154, ,147 Unallocated, included in management and general 34,721 29,872 $ 377,944 $ 376,608 Fundraising expenditures are not allocated. 14. Imagine Canada ethical fundraising and financial accountability code: The following is a presentation of selected financial results in accordance with Imagine Canada s Ethical Fundraising and Financial Accountability Code: Total fundraising revenue $ 6,353,977 $ 6,488,379 Total donations receipted for income tax purposes 3,966,622 4,419,391 Government grants and contributions 116, ,613 Total designated donations 550, ,306 Total expenditures on charitable activities 4,152,645 3,934,250 Total fundraising expenditures 2,522,227 2,451, Comparative figures: Certain 2010 comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year. 20

23 Schedule 1 - Support for People Living with Cancer, with comparative figures for 2010 Patient support and link $ 405,546 $ 474,489 Camp Goodtime 165, ,042 Lodge operation 660, ,070 $ 1,231,638 $ 1,282,601 21