The Students Union, The University of Calgary Financial Statements June 30,
February 2, 2016 Independent Auditor s Report To the Members of The Students Union, The University of Calgary We have audited the accompanying financial statements of The Students Union, The University of Calgary, which comprise of the balance sheet as at June 30,, and the statement of operations and changes in fund balances and statement of cash flows for the year ended June 30,, the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian Accounting Standards for not for profit organizations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility 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 the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. PricewaterhouseCoopers LLP 111 5 Avenue SW, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T: +1 403 509 7500, F: +1 403 781 1825 PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Students Union, The University of Calgary as at June 30, and the results of its operations and its cash flows for the year ended June 30, in accordance with Canadian accounting standards for notfor-profit organizations. Emphasis of matter We draw attention to Note 3 of the financial statements which describes the uncertainty related to the outcome of lawsuits between The Students Union, The University of Calgary and The University of Calgary. Our opinion is not qualified in respect of this matter. Amended financial statements Without modifying our opinion, we draw attention to Note 12 to the financial statements, which explains that the financial statements for the year ended June 30, have been amended from those on which we originally reported on December 1,. Chartered Professional Accountants
Balance Sheet As at June 30, Assets Operating Capital Total Total Current assets Cash 6,233,113-6,233,113 6,988,622 Short term investments 5,000,000-5,000,000 5,000,000 Funds held in trust 77,604-77,604 71,750 Accounts receivable 2,546,685-2,546,685 716,878 Inventories 185,149-185,149 193,530 Prepaid expenses 17,259-17,259 17,906 Due (from) to other funds (3,080,956) 3,080,956 - - 10,978,854 3,080,956 14,059,810 12,988,686 Interest in MacEwan Hall and MacEwan Student Centre (note 3) - 15,225,478 15,225,478 14,933,872 Capital assets (note 4) - 563,863 563,863 575,437 Liabilities 10,978,854 18,870,297 29,849,151 28,497,995 Current liabilities Accounts payable and accrued charges 1,788,034-1,788,034 1,821,804 Liability for funds held in trust 77,604-77,604 71,750 Deferred revenue 349,176-349,176 393,651 Current portion of long-term debt (note 5) - 368,999 368,999 358,170 2,214,814 368,999 2,583,813 2,645,375 Tenant deposits 107,104-107,104 104,697 Deferred contributions (note 6) 2,628,414 4,716,021 7,344,435 6,346,559 Long-term debt (note 5) - 2,953,965 2,953,965 3,323,249 Fund Balances 4,950,332 8,038,985 12,989,317 12,419,880 Unrestricted 372,353-372,353 538,082 Internally restricted (note 7) 3,919,694-3,919,694 3,814,457 Restricted for endowment purposes (note 8) 1,736,475-1,736,475 1,644,567 Internally restricted net assets invested in capital assets and Interest in MacEwan Hall and MacEwan Student Centre - 10,831,312 10,831,312 10,081,009 Commitments (note 11) 6,028,522 10,831,312 16,859,834 16,078,115 10,978,854 18,870,297 29,849,151 28,497,995 Approved by the Student Legislative Council Executive Executive The accompanying notes are an integral part of these financial statements.
Statement of Operations and Changes in Fund Balances For the year ended June 30, Operating Capital Total Total Revenue Operating 12,393,663-12,393,663 12,401,654 Student fees (note 9) 4,372,390-4,372,390 4,577,096 Amortization of deferred contributions (note 6) 641,101 111,816 752,917 2,095,977 Interest 114,189-114,189 114,087 Donations 20,554-20,554 28,420 17,541,897 111,816 17,653,713 19,217,234 Expenditures Salaries 5,993,607-5,993,607 5,897,112 Cost of providing services 5,193,748-5,193,748 5,056,001 Operating 3,176,456-3,176,456 3,014,868 Student services 1,339,009-1,339,009 2,658,029 Amortization - 637,839 637,839 702,118 Building operation 301,982-301,982 374,308 Donations from restricted funds 216,705-216,705 304,370 Interest - 104,555 104,555 116,771 16,221,507 742,394 16,963,901 18,123,577 Excess (deficiency) of revenue over expenditures 1,320,390 (630,578) 689,812 1,093,657 Fund balances Beginning of year 5,997,105 10,081,009 16,078,114 14,887,366 Interfund transfers Repayment of long-term debt (358,455) 358,455 - - Capital asset additions (917,871) 917,871 - - Interest expense (104,555) 104,555 - - (1,380,881) 1,380,881 - - Endowment contributions (note 8) 91,908-91,908 97,092 Fund balances End of year 6,028,522 10,831,312 16,859,834 16,078,115 The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows For the year ended June 30, Cash provided by (used in) Operating activities Excess of revenue over expenditures 689,812 1,093,657 Items not affecting cash Amortization 637,839 702,118 Amortization of deferred contributions (752,917) (2,095,977) 574,734 (300,202) Change in non-cash operating working capital items (1,899,026) 529,966 (1,324,292) 229,764 Investing activities Repayment of long-term debt (358,455) (1,423,581) Additions to capital assets (137,193) (198,041) Additions to interest in MacEwan Hall and MacEwan Student Centre (780,678) (553,674) Endowment contributions 91,908 97,092 (1,184,418) (2,078,204) Financing activities Increase in deferred contributions 1,750,794 3,527,180 Increase in tenant deposits 2,407 5,417 1,753,201 3,532,597 (Decrease) increase in cash during the year (755,509) 1,684,157 Cash Beginning of year 6,988,622 5,304,465 Cash End of year 6,233,113 6,988,622 Interest paid in the year was 104,555 ( 116,771). The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements June 30, 1 Authority The Students Union, The University of Calgary (the Students Union ) is a body corporate created pursuant to the Post-Secondary Learning Act of the Province of Alberta, S.A. 2003, and Chapter 19.5. The Students Union is a not-for-profit organization as defined in the Income Tax Act and therefore is not subject to income tax. The Students Union s mission is to provide for the administration of the affairs of the undergraduate students of The University of Calgary ( The University ). Under its By-laws, the members of the Students Union annually elect The Student Executive Cabinet, which is responsible for, inter alia, managing the affairs of the Students Union consistent with the decisions of The Student s Legislative Council, managing the Students Union s personnel, and preparing the annual budget. The Students Union has an economic relationship with the University of Calgary through the MacEwan Student Centre (note 3) but operates as an independent, autonomous body separate and distinct from The University. 2 Significant accounting policies Basis of accounting The financial statements of the Students Union have been prepared in accordance with Canadian accounting standards for not-for-profit organizations (ASNPO) as issued by the Canadian Accounting Standards Board. Use of estimates The preparation of the financial statements in conformity with ASNPO requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Fund accounting The Operating Fund consists of assets, liabilities, revenue and expenditures related to the Students Union s student government and student and commercial activities. In addition, the Operating Fund reports activities related to endowment funds as well as funds internally restricted by the Students Union. The Capital Fund consists of assets, liabilities, revenue and expenditures related to the Students Union s capital assets and investment in MacEwan Hall and MacEwan Student Centre. (1)
Notes to Financial Statements June 30, Revenue recognition The Students Union follows the deferral method of accounting for contributions. Restricted contributions, other than those related to capital assets or interest in MacEwan Hall and MacEwan Student Centre, are recognized as revenue in the year in which the related expenses are incurred in the Operating Fund. Restricted contributions related to capital assets or interest in MacEwan Hall and MacEwan Student Centre, which are reported in the Capital Fund are recognized as revenue as the related capital assets or interest in MacEwan Hall and MacEwan Student Centre are amortized. Unrestricted contributions are recognized as revenue of the appropriate fund in the year received or receivable if the amount can be reasonably estimated and collection is reasonably assured. Endowment contributions which are reported in the Operating Fund are recognized as direct increases in fund balances restricted for endowment purposes in the period in which they are received. Investment income from endowment funds which is restricted for use for library expenses, are initially recorded as deferred revenue then recognized as revenue in the year in which the related library expenses are incurred. Student fees are recognized as revenue over the period for which services are delivered. Operating revenue, consisting of commercial services, is recognized as revenue when products delivered or services sold are substantially provided. Inventories Inventories are valued at the lower of cost and net realizable value. Interest in MacEwan Hall and MacEwan Student Centre The Students Union s interest in the student-occupied areas within MacEwan Hall and MacEwan Student Centre is recorded at cost. Amortization is charged on a straight-line basis over 40 years. No amortization is provided on construction-in-progress included in Interest in MacEwan Hall and MacEwan Student Centre until the assets are put in use. (2)
Notes to Financial Statements June 30, Capital assets Capital assets are recorded at cost. Amortization is computed on the straight-line basis over the estimated useful life of the assets at the following rates: Furniture and equipment 5 years Kitchen equipment 10 years No amortization is provided on construction in progress until the assets are put in use. Short term investments The short term investments consists of highly liquid guaranteed investment certificates with terms to maturity greater than ninety days, but no more than one year. As at June 30,, The Students Union s short term investments consists of guaranteed investment certificates held by a major bank bearing interest at 1.3% per annum. Funds held in trust and liability for funds held in trust Funds held in trust represent monies managed by the Students Union on behalf of other organizations. The Students Union does not report the revenue and expenses related to these funds. Financial instruments The Students' Union initially measures financial assets and financial liabilities at fair value. It subsequently measures its investments at fair value. The financial assets subsequently measured at amortized cost include cash, funds held in trust, accounts receivable. The financial liabilities subsequently recorded at amortized cost include accounts payable and accrued charges, liability for funds held in trust, tenant deposits for leasehold improvements and debt. It is the opinion of management that the Students' Union is not subject to significant credit, interest rate, price, liquidities or currency risk related to these financial instruments. 3 Interest in MacEwan Hall and MacEwan Student Centre The Students Union operates under a License of Occupation, Operating and Management Agreement (the Agreement ) with the University of Calgary (the "University"). This agreement provides the Students Union a right to occupy space in MacEwan Hall and MacEwan Student Centre rent free, the right to retain the revenues from the use of such space for commercial activities, and the right to provide certain management services, in consideration for contributions the Students Union made towards the cost of construction of the buildings. This agreement term expired on December 9, after considering the available renewal provisions within the agreement. Further, the agreement allowed for five additional one year extensions of the agreement subject to neither party submitting a notification to terminate the extension agreement. (3)
Notes to Financial Statements June 30, On September 23,, the Governors of the University notified the Students' Union of termination of this agreement effective December 9,. On April 28,, the Students' Union filed a statement of claim and on October 21, served this statement of claim to the University regarding a legal ownership interest of MacEwan Hall and MacEwan Student Centre and has asked the court that the Students Union continue to occupy and operate the building pursuant to this Agreement until the court case is resolved. On November 10, the University filed its statement of defence. To date, an interim continuance of the Agreement has neither been awarded nor denied. On November 13,, a request for an expedited hearing date for an injunction application was requested to be held on December 4, (see subsequent event note 13). These financial statements do not reflect any adjustments to the carrying value of assets and liabilities and reported revenue and expenses and the statement of financial position classifications that might be necessary if the Students' Union were unsuccessful in the claim with the University and/or the discontinuance of this Agreement. Such adjustments could be material. The Students Union is responsible for the payment of retail operation utility costs annually under the agreement. The Students Union continues to record its investment in the interest in MacEwan Hall and the MacEwan Student Centre as a long-term asset as if the Students Union has the beneficial risks and rewards of ownership of these assets. Redevelopment costs 23,680,886 22,941,383 Less: Accumulated amortization (8,455,408) (8,007,511) Amortization provided for in the current year totalled 489,072 ( 487,710). 15,225,478 14,933,872 Included in redevelopment costs are construction-in-progress amounts of 347,779 ( 534,994) that relate to assets not put in use. 4 Capital assets Cost Accumulated amortization Net Net Kitchen equipment 176,530 60,424 116,106 127,094 Furniture and equipment 1,398,855 951,098 447,757 448,343 1,575,385 1,011,522 563,863 575,437 (4)
Notes to Financial Statements June 30, Amortization provided for in the current year totalled 148,767 ( 214,408). 5 Long-term debt Non-revolving term facility, bearing interest at 2.98% per annum, maturing July 8, 2018, with floating instalment payments, collateralized by an assignment of student fees. 3,322,964 3,681,419 Less: Amounts due within one year (368,999) (358,170) 6 Deferred contributions 2,953,965 3,323,249 Deferred contributions of the Operating Fund are comprised of contributions received that were restricted by the contributor and remain unspent at year end. Deferred contributions of the Capital Fund are comprised of a student levy imposed January 1, 1996 and other funds which have been designated for the purpose of the redevelopment project to the MacEwan Student Centre. Changes in deferred contributions are as follows: Operating Fund Capital Fund Net Net Balance Beginning of year 2,198,151 4,148,408 6,346,559 4,915,359 Add:Amounts recorded for future expenditures 1,071,364 679,429 1,750,793 3,527,177 Less: Amount amortized to revenue (641,101) (111,816) (752,917) (2,095,977) Balance End of year 2,628,414 4,716,021 7,344,435 6,346,559 (5)
Notes to Financial Statements June 30, 7 Internally restricted reserve funds Certain funds have been restricted for use by the Students Union for the following purposes. These restricted funds are invested in short-term deposits. Student Health Plan 3,559,118 3,440,073 Refugee students 218,817 205,019 Food bank 114,640 131,380 Election campaign 18,354 24,722 Food Court Reserve 8,338 8,338 Other 122 4,619 Tutor referral 305 306 8 Endowment Funds 3,919,694 3,814,457 Funds contributed through a special Students Union levy are designated to assist the University of Calgary Library. 50% of all funds contributed through the special levy must be permanently maintained for the University of Calgary Library and are classified as endowment funds. The fiscal endowment fund contribution of 91,908 ( 97,092) represents 50% of the fiscal special student levy of 183,817 (fiscal 194,184) (note 9). 9 Student fees Total student fees received through the University of Calgary 5,269,577 5,522,811 Other fees 27,849 27,596 Less: Allocations to Library Endowment Fund (91,908) (97,092) Less: Amounts received on behalf of others Legal aid (83,108) (87,975) Gauntlet (225,508) (238,133) NUTV (246,577) (257,124) CJSW (277,934) (292,987) 4,372,391 4,577,096 Included in total student fees is 183,817 designated for the University of Calgary Library. 50% of the funds contributed or 91,908 ( 97,092) are recorded as contributions to endowment funds (note 8) as these contributions must be permanently maintained. (6)
Notes to Financial Statements June 30, 10 Government remittances Accounts payable and accrued charges include government remittances payable of 17,168 ( 11,833). 11 Commitments Minimum payments in respect of operating leases for photocopy equipment are as follows: 2016 39,664 2017 39,664 12 Amendment to financial statements The financial statements were amended to correct for a misstatement in Note 6 where amounts recorded for future expenditures were not appropriately updated to match the balance sheet at June 30,. There has been no change to the balance sheet as a result of this correction to the note. 13 Subsequent events On December 3,, the Students Union and the University agreed to mediation with regards to ownership of MacHall and MacEwan Student Centre ( MacHall ) and negotiation of a new agreement to replace the existing License, Operating and Management Agreement. In accordance with this Standstill Agreement, the mediation period will expire on February 26, 2016 and is subject to extension or earlier termination by either party. All legal proceedings (as outlined in Note 3) are put on hold during the mediation period and the Students Union will continue to operate and manage MacHall under the existing license of Occupation, Operating and Management Agreement, until 21 days after the end of the mediation period. (7)
Schedule of Operating Revenue and Expenditures (Unaudited) For the year ended June 30, Schedule 1 Student government Student activities Commercial services Reserve Total (schedule 2) Revenue Operating - - 184,727 161,050 12,208,936 12,240,604 - - 12,393,663 12,401,654 Student fees (note 9) 1,424,653 1,512,776 - - - - 2,947,737 3,064,321 4,372,390 4,577,096 Amortization of deferred contributions - - 641,101 1,990,079 - - - 641,101 1,990,079 Interest - - 114,189 114,087-114,189 114,087 Donations - - 37,294 22,617 - (16,740) 5,802 20,554 28,420 1,424,653 1,512,776 863,122 2,173,746 12,323,125 12,354,691 2,930,997 3,070,123 17,541,897 19,111,336 Expenditures Cost of providing services - - 39,787 24,642 2,591,406 2,575,338 2,562,554 2,456,021 5,193,748 5,056,001 Salaries - - 1,283,301 1,212,710 4,710,306 4,684,402-5,993,607 5,897,112 Operating - - - - 3,129,957 2,990,869 46,500 24,000 3,176,457 3,014,868 Building operation - - - - 301,982 374,309 - - 301,982 374,308 Student services - - 1,339,010 2,658,029 - - - 1,339,010 2,658,029 Donations from restricted funds - - - - 216,704 304,370 216,704 304,370 - - 2,662,098 3,895,381 10,733,651 10,624,918 2,825,758 2,784,391 16,221,508 17,304,688 Excess (deficiency) of revenue over expenditures 1,424,653 1,512,776 (1,798,976) (1,721,635) 1,589,474 1,729,773 105,239 285,732 1,320,389 1,806,648
Schedule of Commercial Services Revenue and Expenditures (Unaudited) For the year ended June 30, Schedule 2 Business leasing Retail Food/beverage/events Total Revenue 2,899,028 3,033,151 1,488,045 1,501,222 7,936,051 7,820,318 12,323,125 12,354,691 Expenditures Cost of providing services - - 842,875 854,368 1,748,531 1,720,969 2,591,406 2,575,338 Salaries 1,251,779 1,251,821 243,039 237,386 3,215,488 3,195,195 4,710,306 4,684,402 Operating 682,056 580,865 75,764 79,724 2,372,137 2,330,280 3,129,956 2,990,869 Building operation 206,966 279,299 5,208 5,208 89,808 89,809 301,982 374,309 2,140,801 2,111,985 1,166,886 1,176,686 7,425,964 7,336,253 10,733,650 10,624,918 Excess of revenue over expenditures 758,227 921,166 321,159 324,536 510,087 484,065 1,589,475 1,729,773