MORTGAGE BROKERS ASSOCIATION OF BRITISH COLUMBIA FINANCIAL STATEMENTS I n d e x Auditor's Report 1-2 Balance Sheet 3 Statement of Operations and Net Assets 4 Statement of Cash Flows 5 Notes to Financial Statements 6-8
FEARN & ASSOCIATES 200 8661 201 Street Matthew Fearn Langley, BC V2Y 0G9 CPA, CGA 604-866-8752 Auditor's Report The Members of MORTGAGE BROKERS ASSOCIATION OF BRITISH COLUMBIA REPORT ON THE FINANCIAL STATEMENTS I have audited the accompanying financial statements of Mortgage Brokers Association of British Columbia, which comprise the balance sheet as at December 31, 2016, and the statement of operations and net assets, and the statement of 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. 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 of material misstatement. Auditor s responsibility My responsibility is to express an opinion on these financial statements based on my audit. I have 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 the 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 opinion. -1-
Opinion In my opinion, these financial statements present fairly, in all material respects, the financial position of Mortgage Brokers Association of British Columbia as at December 31, 2016, 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. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS As required by the Society Act of British Columbia, I report that, in my opinion Canadian accounting standards for not-for-profit organizations have been applied on a basis consistent with that of the preceding year. Langley, B.C. May 29, 2017-2-
BALANCE SHEET AS AT A S S E T S 2016 2015 Current Cash and cashable term deposits $ 661,139 $ 509,771 Accounts receivable 100,529 78,834 Prepaid expenses 10,262 14,828 Due from related party (note 4) 34,583 48,250 806,513 651,683 Tangible Capital Assets (note 3) 6,967 6,558 $ 813,480 $ 658,241 L I A B I L I T I E S Current Accounts payable $ 7,500 $ 11,827 GST payable 9,739 6,909 Deferred membership fees 113,331 94,762 Unearned trade show revenue 198,031 228,225 328,601 341,723 Net assets 484,879 316,518 $ 813,480 $ 658,241 Approved by the Board - 3 -
STATEMENT OF OPERATIONS AND NET ASSETS YEAR ENDED 2016 2015 Revenue Event and education $ 589,806 $ 403,133 Membership dues 239,301 201,099 Publication and other 21,727 217,487 Management and facility fees 116,720 115,680 967,554 937,399 Operating expenses Administration 48,273 51,935 Amortization 2,977 2,280 Communications, media and online 37,308 199,820 Charitable donations 56,132 6,676 Education 29,745 7,185 Events 304,987 302,617 Governance and strategic direction 12,886 8,788 CMBA and interprovincial associations 3,511 45,284 Members Benefits program - 52,633 Professional, insurance and consulting 31,128 33,952 Rent 19,017 18,287 Salaries and benefits 252,881 187,923 Surveys and research 348 145 799,193 917,525 Operating surplus (deficit) for the year 168,361 19,874 Net assets at beginning of the year 316,518 296,644 Net assets at end of the year $ 484,879 $ 316,518-4 - Fearn &Associates
STATEMENT OF CASH FLOWS 2016 2015 Cash flows from (to) operating activities Operating surplus (deficit) for the year $ 168,361 $ 19,874 Items not involving cash - amortization 2,977 2,280 171,338 22,154 Changes in working capital items: Accounts receivable (21,695) (42,320) Prepaid expenses 4,566 13,705 Accounts payable (4,327) (25,399) GST payable 2,830 109 Deffered membership fees 18,569 19,132 Unearned trade show revenue (30,194) 45,707 (30,251) 10,934 Cash flows from (to) operations 141,087 33,088 Cash flows from (to) financing and investing activities Purchase of property, plant and equipment (3,386) (216) Advances from (to) related party 13,667 25,422 Cash flows from (to) financing and investing 10,281 25,206 Increase in cash during the year 151,368 58,294 Cash, beginning of the year 509,771 451,477 Cash, end of the year $ 661,139 $ 509,771-5 -
NOTES TO THE FINANCIAL STATEMENTS 1. Description of Business The Association is a not-for-profit organization incorporated under the Society Act of British Columbia on April 30, 1990. The Association's mission is to provide its members with the best educational opportunities, ethical guidance and professional representation, while increasing consumer awareness by advocating mortgage brokers as the number one choice for mortgage financing. 2. Significant Accounting Policies a) These financial statements have been prepared in accordance with Part III of the CPA Canada Handbook- Accounting standards for Not-for-Profit Organizations which sets out generally accepted accounting principles for not-for-profit organizations in Canada and includes the significant accounting policies described hereafter. b) Revenue Recognition The Association follows the deferral method of accounting for revenue. Membership dues are deferred and amortized to revenue over the membership period. Restricted project and event revenues are recognized when earned and the related expenses are incurred. c) Tangible Capital Assets Tangible capital assets are recorded at cost. Amortization of computer equipment is calculated using the declining balance method at 30% annual rate. The website development is amortized on the strait line basis over 3 years. Office equipment is amortized on the straight line basis over 5 years d) Income Taxes The Association is a non-profit organization within the meaning of the Income Tax Act (Canada) and is exempt from federal and provincial income taxes. e) Use of Estimates 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 in the financial statements. By their nature, these estimates are subject to measurement uncertainty and actual results may differ from those estimates. -6-
NOTES TO THE FINANCIAL STATEMENTS 3. Tangible Capital Assets Accumulated Cost Amortization 2016 2015 Computer equipment $ 30,936 $ 27,512 $ 3,424 $ 1,789 Office equipment 17,419 13,876 3,543 4,769 Website development 5,000 5,000 - - $ 53,355 $ 46,388 $ 6,967 $ 6,558 4. Related Party Transactions The Association is related to the Mortgage Brokers Institute of British Columbia (the Institute) which was established to provide professional education to mortgage brokers that comply with educational standards set up by the Financial Institutions Commission (FICOM). The institute is a not-for-profit organization organized under the BC Society Act and is exempt from federal and provincial income taxes. The Association and the Institute are working collaboratively to raise mortgage broker standards in British Columbia. The Association exhibits significant influence over the Institute because certain members of the Association's Board of Directors also form part of the directors of the Institute and they participate in the policy making process. Further, there are material inter-entity transactions and interchange of managerial personnel. During the year the Association earned management fee revenue of $116,720 (2015 - $115,680) from the Institute. These transactions are measured at the exchange amount. Included in accounts receivable is $34,583 (2015 - $48,250) owing from the Institute in respect of these transactions. Advances receivable from the Institute of $34,583 (2015 - $48,250) are unsecured, noninterest bearing and have no specific terms for repayment. The Institute intends to repay advances from the Association during 2017 therefore this amount is classified as current. -7-
NOTES TO THE FINANCIAL STATEMENTS 5. Capital Disclosures As at December 31, 2016, the Association's capital is comprised of net assets. The Association's objectives when managing capital are as follows: a) To safeguard the Association's ability to continue as a going concern, so that it can continue to provide benefits to its members; and b) To have sufficient cash and short term investments on hand to fund the Association's business plans. 6. Financial Instruments The Association's financial instruments consist of cash and cashable term deposits, accounts receivable, due from related party, and accounts payable. It is management s opinion that the Association is not exposed to significant interest, currency, and credit risk ensuing from these financial instruments which are measured at amortized cost. The fair value of these financial instruments approximate their carrying value. -8-