Financial Statements of ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION
KPMG LLP Telephone (705) 675-8500 Chartered Accountants Fax (705) 675-7586 Claridge Executive Centre In Watts (1-800) 461-3551 144 Pine Street, PO Box 700 Internet www.kpmg.ca Sudbury ON P3E 4R6 INDEPENDENT AUDITORS REPORT To the Members of the Board of Directors of Orillia Soldiers Memorial Hospital Foundation We have audited the accompanying financial statements of Orillia Soldiers Memorial Hospital Foundation, which comprise the statement of financial position as at March 31, 2014, the statements of operations and changes in fund balances and cash flows for the year then ended, and notes, comprising 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. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our 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, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.
Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Orillia Soldiers Memorial Hospital Foundation as at March 31, 2014, 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. Chartered Professional Accountants, Licensed Public Accountants June 25, 2014 Sudbury, Canada
ORILLIA SOLDIERS' MEMORIAL HOSPITAL FOUNDATION Statement of Financial Position March 31, 2014, with comparative information for 2013 General Fund Restricted Fund Endowment Funds March 31, 2014 March 31, 2013 Assets Cash (note 2) $ 569,988-717,149 1,287,137 1,227,338 Accounts receivable 23,260 - - 23,260 45,820 Prepaid expenses 12,771 - - 12,771 9,053 606,019-717,149 1,323,168 1,282,211 Investments (note 3) 6,081,310-290,475 6,371,785 5,935,836 Capital assets (note 4) 771,029 - - 771,029 537,688 Due to / from general fund (2,662,825) 2,662,825 - - - $ 4,795,533 2,662,825 1,007,624 8,465,982 7,755,735 Liabilities and Fund Balances Current liabilities: Accounts payable and accrued liabilities $ 2,422 - - 2,422 12,767 Deferred revenue 18,000 - - 18,000 30,250 Payable to Orillia Soldiers's Memorial Hospital (note 5) 415,203 - - 415,203 133,048 435,625 - - 435,625 176,065 Fund balances: Externally restricted - 2,662,825 1,007,624 3,670,449 3,269,932 Unrestricted 4,359,908 - - 4,359,908 4,309,738 4,359,908 2,662,825 1,007,624 8,030,357 7,579,670 Commitment (note 8) $ 4,795,533 2,662,825 1,007,624 8,465,982 7,755,735 See accompanying notes to financial statements. On behalf of the Board: Director Director 1
ORILLIA SOLDIERS' MEMORIAL HOSPITAL FOUNDATION Statement of Operations and Changes in Fund Balances, with comparative information for 2013 Endowment Funds 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 General Fund Restricted Fund Education Family Practice Designated Total Total Revenue: Donations $ 466,553 492,506 1,098,821 1,225,181 67,575 18,929 - - 100 650 1,633,049 1,737,266 Bequests 874,759 1,643,717 20,000 10,927 - - - - - - 894,759 1,654,644 Investment income 141,098 141,459 - - 10,855 7,113 1,884 1,831 462 430 154,299 150,833 Special events 217,954 215,497 - - - - - - - - 217,954 215,497 Rental income 33,884 8,917 - - - - - - - - 33,884 8,917 1,734,248 2,502,096 1,118,821 1,236,108 78,430 26,042 1,884 1,831 562 1,080 2,933,945 3,767,157 Expenses: General and office 13,331 11,820 - - - - - - - - 13,331 11,820 Administration - - 7,085 14,510 - - - - - - 7,085 14,510 Promotion, advertising and marketing 28,788 36,800 - - - - - - - - 28,788 36,800 Insurance 8,169 8,305 - - - - - - - - 8,169 8,305 Legal, accounting and professional fees 53,704 22,234 - - - - - - - - 53,704 22,234 Meeting, education, dues and travel 32,142 22,877 - - - - - - - - 32,142 22,877 Wages and benefits 389,137 346,805 - - - - - - - - 389,137 346,805 Campaign 10,485 4,685 - - - - - - - - 10,485 4,685 Property 20,472 17,603 - - - - - - - - 20,472 17,603 Special events 72,552 89,613 - - - - - - - - 72,552 89,613 Direct mail 47,402 46,359 - - - - - - - - 47,402 46,359 Donations - other 13,789 10,000 - - - - - - - - 13,789 10,000 Amortization of capital assets 30,769 24,018 - - - - - - - - 30,769 24,018 720,740 641,119 7,085 14,510 - - - - - - 727,825 655,629 Transfer to Orillia Soldiers' Memorial Hospital (676,738) (385,223) (979,623) (668,375) (3,695) (4,529) - - - - (1,660,056) (1,058,127) Transfer to other charity - - (95,377) - - - - - - - (95,377) - Excess of revenue over expenses 336,770 1,475,754 36,736 553,223 74,735 21,513 1,884 1,831 562 1,080 450,687 2,053,401 Fund balances, beginning of year 4,309,738 3,167,064 2,626,089 2,072,866 563,182 210,989 67,820 64,789 12,841 10,561 7,579,670 5,526,269 Interfund transfers (286,600) (333,080) - - 284,200 330,680 1,200 1,200 1,200 1,200 - - Fund balances, end of year $ 4,359,908 4,309,738 2,662,825 2,626,089 922,117 563,182 70,904 67,820 14,603 12,841 8,030,357 7,579,670 See accompanying notes to financial statements. 2
ORILLIA SOLDIERS' MEMORIAL HOSPITAL FOUNDATION Statement of Cash Flows, with comparative information for 2013 2014 2013 Cash flows from operating activities: Excess of revenue over expenses $ 450,687 2,053,401 Adjustments for: Amortization of capital assets 30,769 24,018 Unrealized gain on investments (22,466) (33,646) 458,990 2,043,773 Changes in non-cash working capital: Decrease (increase) in accounts receivable 22,560 (12,948) Increase (decrease) in prepaid expenses (3,718) 2,674 Decrease in accounts payable and accrued liabilities (10,345) (1,190) Decrease in deferred revenue (12,250) (1,500) Increase (decrease) in payable to Orillia Soldiers' Memorial Hospital 282,155 (173,581) 737,392 1,857,228 Investing activities: Increase in investments (413,483) (2,101,294) Purchase of capital assets (264,110) (11,637) (677,593) (2,112,931) Net increase (decrease) in cash 59,799 (255,703) Cash position, beginning of year 1,227,338 1,483,041 Cash position, end of year $ 1,287,137 1,227,338 See accompanying notes to financial statements. 3
ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION Notes to Financial Statements The Orillia Soldiers Memorial Hospital Foundation (the Foundation ) was incorporated without share capital under the laws of Ontario. The Foundation is a registered charity under the Income Tax Act and accordingly, is exempt from income taxes, provided certain requirements of the Income Tax Act are met. The Foundation is principally involved in raising funds for the benefit of the Orillia Soldiers Memorial Hospital. The fund balances and operations of the Foundation are ultimately for the benefit of the Orillia Soldiers Memorial Hospital. The Foundation is an independent legal entity from the Hospital and therefore these financial statements have not been consolidated with the Hospital. 1. Significant accounting policies: These financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the CPA Canada Handbook - Accounting. The Foundation s significant accounting policies are as follows: (a) Basis of presentation: In order to ensure observance and restrictions placed on the use of resources, the accounts are maintained in accordance with the principles of fund accounting. The General Fund accounts for the Foundations program delivery, fundraising and administrative activities. This fund reports unrestricted resources. The Restricted Fund reports resources that are to be used for designated purposes specified by the donor. The Endowment Fund reports resources contributed for endowment. Investment income earned on resources of the Endowment Fund is reported as income of the Fund. (i) (ii) The Education Endowment Fund has been established to support staff, physician and general education for Orillia Soldiers Memorial Hospital. There are three education endowment categories named Linda Lewis, Brian McGugan, Michael Keyman McParland, and general use. The Dr. A. Charles Baillie & Mr. Wm. A. Hume Family Practice Fund has been established for the purpose of supporting physician recruitment. (iii) The Designated Endowment Fund has been established to support various programs within the hospital such as the teddy bear fund. 4
ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION Notes to Financial Statements 1. Significant accounting policies (continued): (b) Revenue recognition: The financial statements are prepared according to the restricted fund method of accounting. Under this method, the following principles have been applied. Contributions are recorded as revenue in the respective funds based on their nature, source and the restrictions stipulated by the donor. Contributions including pledges and donations are recognized as revenue when received or receivable if the amounts can be reasonably estimated and collection is reasonably assured. In-kind donations are recorded at their appraised value. (c) Contributed services: Contributions of services are not recognized in the financial statements. (d) Capital assets: Purchased capital assets are recorded at cost. Contributed capital assets are recorded at fair value at the date of contribution. Capital assets are amortized on a straight-line basis over their estimated useful life as follows: Estimated Useful Lives - Years Buildings 25 Computer equipment 3 Computer software 2 Furniture and equipment 10 (e) Use of estimates: The preparation of the financial statements in conformity with Canadian accounting standards for not-for-profit organizations 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 the reported amounts of revenues and expenses during the year. Significant items subject to such estimates and assumptions include the carrying amount of capital assets. Actual results could differ from those estimates. These estimates are reviewed annually, and, as adjustments become necessary, they are reported in earnings in the year in which they become known. 5
ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION Notes to Financial Statements 1. Significant accounting policies (continued): (f) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Freestanding derivative instruments that are not in a qualifying hedging relationship and equity instruments that are quoted in an active market are subsequently measured at fair value. All other financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carry the instruments at fair value. The Foundation has elected to carry its investments at fair value. Fair value is determined at quoted market prices. Sales and purchases of financial instruments are recorded on the settlement date. Transaction costs incurred on the acquisition of financial instruments are expensed as incurred. 2. Cash: The Foundation s bank accounts are held at one chartered bank. The bank accounts earn interest at a variable rate. 3. Investments: Investments consist of: March 31, 2014 March 31, 2013 Market Market Cost Value Cost Value Guaranteed investment certificates $ 5,263,469 5,263,469 4,817,200 4,817,200 Government bonds 1,014,000 1,036,466 1,014,000 1,048,514 Cash 4,599 4,599 5,435 5,435 Accrued interest 67,251 67,251 64,687 64,687 $ 6,349,319 6,371,785 5,901,322 5,935,836 The guaranteed investment certificates earn interest at rates ranging from 0.75% to 2.90% and mature between 2014 and 2019. The government bonds earn interest at rates ranging from 3.15% to 4.75% and mature between 2020 and 2021. 6
ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION Notes to Financial Statements 4. Capital assets: 2014 Accumulated Net book Cost amortization value Land $ 175,000 $ $ 175,000 Buildings 642,253 76,813 565,440 Computer equipment 39,442 24,100 15,342 Furniture and equipment 28,603 13,356 15,247 Computer software 21,798 21,798 $ 907,096 $ 136,067 $ 771,029 2013 Accumulated Net book Cost amortization value Land $ 125,000 $ $ 125,000 Buildings 439,808 55,172 384,636 Computer equipment 37,131 27,008 10,123 Furniture and equipment 29,792 11,863 17,929 Computer software 21,798 21,798 $ 653,529 $ 115,841 $ 537,688 5. Related party transactions: The Foundation receives and maintains funds to provide for education, research and the enhancements of facilities and services at Orillia Soldiers Memorial Hospital. During the year, the Foundation transferred $1,660,056 (2013 - $1,058,127) to the Orillia Soldiers Memorial Hospital. At year end, there was a balance of $415,203 (2013 - $133,048) due to Orillia Soldiers Memorial Hospital. The Foundation provides the Orillia Soldiers Memorial Hospital with office space and equipment free of charge. The fair market value of such space is $ 35,134 (2013 - $14,938). 7
ORILLIA SOLDIERS MEMORIAL HOSPITAL FOUNDATION Notes to Financial Statements 6. Financial risk and concentration of risk: (a) Credit risk: Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss. The Foundation is exposed to credit risk with respect to the accounts receivable. The Foundation assesses, on a continuous basis, accounts receivable and provides for any amounts that are not collectible in the allowance for doubtful accounts. (b) Liquidity risk: Liquidity risk is the risk that the Foundation will be unable to fulfill its obligations on a timely basis or at a reasonable cost. The Foundation manages its liquidity risk by monitoring its operating requirements. The Foundation prepares budget and cash forecasts to ensure it has sufficient funds to fulfill its obligations. There has been no change to the risk exposures from 2013. (c) Interest rate risk: The Foundation is not exposed to any significant interest rate risk. 7. Capital disclosures: The Foundation considers its capital to be its fund balances, including general, restricted and endowment fund balances. The Foundation receives externally restricted donations from numerous donors to be used for specific purposes. These funds are maintained and disbursed under the terms of the relevant funding restrictions and management is responsible for adhering to the provisions of these restrictions. In managing it capital, the Foundation s primary objective is to fundraise in support of Orillia Soldiers Memorial Hospital in order to safeguard its ability to continue as a going concern so it can continue to fulfill its mandate. The Foundation has developed specific investment policies to maintain its capital based on the intended purpose of the funds. In addition, annual budgets are developed and monitored to ensure the capital of the Foundation is maintained at an appropriate level. 8. Commitment: The Foundation has committed to provide $800,000 to the Orillia Soldier s Memorial Hospital (the Hospital ) in future years to fund the renovation of the Neonatal Intensive Care Unit. Funding will be flowed to the Hospital as expenditures of the related project are incurred. 8