FINANCIAL STATEMENTS DECEMBER 31, 2016
INDEPENDENT AUDITORS' REPORT To the members of Association of Ontario Land Surveyors, We have audited the accompanying financial statements of the Association of Ontario Land Surveyors, which comprise the statement of financial position as at December 31, 2016 and the statements of operations, changes in fund balances and 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. 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for my audit opinion Opinion In our opinion, these financial statements present fairly, in all material respects, the financial position of the Association of Ontario Land Surveyors 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. Toronto, Ontario February 23, 2017 RSSM LLP Licensed Public Accountants
STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2016 General Liability Claims York Compen- Operating Insurance Reserve Project sation Total Total Fund Fund Fund Fund Fund 2016 2015 $ $ $ $ $ $ $ ASSETS CURRENT Cash 771,286 10,827 669,243 34,078-1,485,434 1,207,430 Investments (note 2) 426,886 1,107,639 1,048,522-150,000 2,733,047 2,538,664 Accounts receivable 12,326 - - - - 12,326 8,303 HST recoverable - - - 3,614-3,614 - Inventory 12,171 - - - - 12,171 12,413 Prepaid expenses 250,937 - - - - 250,937 154,972 1,473,606 1,118,466 1,717,765 37,692 150,000 4,497,529 3,921,782 CAPITAL ASSETS (note 3) 128,484 - - - - 128,484 127,660 TOTAL ASSETS 1,602,090 1,118,466 1,717,765 37,692 150,000 4,626,013 4,049,442 LIABILITIES CURRENT Accounts payable and accrued liabilities 142,369 - - - - 142,369 156,929 HST payable 55,636 - - - - 55,636 21,252 Deferred revenue (note 5) 1,126,430 - - - - 1,126,430 664,859 1,324,435 - - - - 1,324,435 843,040 FUND BALANCES Invested in capital assets 128,484 - - - - 128,484 127,659 Discipline reserve 2,678 - - - - 2,678 2,775 Externally restricted - 1,118,466 1,717,765 37,692 150,000 3,023,923 3,016,879 Unrestricted 145,449 - - - - 145,449 56,858 Building reserve 1,044 - - - - 1,044 2,231 277,655 1,118,466 1,717,765 37,692 150,000 3,301,578 3,206,402 TOTAL LIABILITIES AND FUND BALANCES 1,602,090 1,118,466 1,717,765 37,692 150,000 4,626,013 4,049,442 COMMITMENTS (NOTE 4) APPROVED ON BEHALF OF THE COUNCIL: Executive Director and Treasurer Finance Councillor See accompanying notes to the financial statements
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2016 General Operating Fund Restricted Funds Budget Liability Claims York Compen- 2016 Actual Actual Reserve Reserve Project sation Total Total (Note 7) 2016 2015 Fund Fund Fund Fund 2016 2015 $ $ $ $ $ $ $ $ $ REVENUE Fees and licences 1,288,400 1,308,014 1,113,541 - - - - - - Survey Review Department 540,000 529,832 509,752 - - - - - - Survey Review Index 39,000 32,113 28,300 - - - - - - Investment income (loss) 10,000 42,821 (4,759) 146,312 - - 14,070 160,382 (5,768) Cost-related activities 281,000 312,109 298,921 - - - - - - Continuing education 7,500 75,262 92,712 - - - - - - Internship program - - 1,491 - - - - - - Insurance premiums - - - 1,464,861 550,000 - - 2,014,861 2,005,489 Consulting income - - - - - - - - 285,007 Other income 7,000 5,879 6,877 1,500 - - - 1,500 1,500 2,172,900 2,306,030 2,046,835 1,612,673 550,000-14,070 2,176,743 2,286,228 EXPENSES Salaries, benefits and consultants 655,900 678,097 644,969 48,000-22,839-70,839 280,299 Office and general 141,300 120,878 124,540 243-4,963-5,206 19,979 Survey Review Department 510,800 529,832 509,752 - - - - - - Survey Records Index 39,000 42,000 39,001 - - - - - - Building 53,300 45,611 42,536 - - - - - - Discipline expenses 50,000 235,097 150,748 - - - - - - Constitutional challenge 100,000 23,495 54,114 - - - - - - Cost-related activities 261,000 303,337 261,068 - - - - - - Governance commission 152,300 52,362 63,815 - - - - - - Professional standards and practice commission 5,100 13,493 23,290 - - - - - - Outreach and professional education commission 51,000 44,531 37,882 - - - - - - Member services and other commission 40,400 21,929 52,880 - - - - - - Continuing education 9,000 75,262 92,712 - - - - - - Insurance premium - - - 1,427,090 - - - 1,427,090 1,421,465 Claims against the fund - - - - 652,494 - - 652,494 534,532 Credit card charges - 46,044 44,341 - - - - - - 2,069,100 2,231,968 2,141,648 1,475,333 652,494 27,802-2,155,629 2,256,275 EXCESS OF REVENUE OVER EXPENSES (EXPENSES OVER REVENUE) 103,800 74,062 (94,813) 137,340 (102,494) (27,802) 14,070 21,114 29,953 See accompanying notes to the financial statements
STATEMENT OF CHANGES IN FUND BALANCES YEAR ENDED DECEMBER 31, 2016 General Operating Fund Restricted Funds Invested in Liability Claims York Compen- Capital Discipline Building Reserve Reserve Project sation Total Total Unrestricted Assets Reserve Reserve Fund Fund Fund Fund 2016 2015 $ $ $ $ $ $ $ $ $ $ Fund balances at the beginning of year 56,858 127,659 2,775 2,231 981,126 1,820,259 65,494 150,000 3,206,402 3,271,262 Excess of revenue over expenses (expenses over revenue) 317,696 (8,537) (235,097) - 137,340 (102,494) (27,802) 14,070 95,176 (64,860) Investment in capital assets (5,175) 9,362 - (4,187) - - - - - - Intrafund transfers (note 8) (238,000) - 235,000 3,000 - - - - - - Interfund transfers (note 8) 14,070 - - - - - - (14,070) - - FUND BALANCES AT THE END OF YEAR 145,449 128,484 2,678 1,044 1,118,466 1,717,765 37,692 150,000 3,301,578 3,206,402 See accompanying notes to the financial statements
STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2016 General Operating Fund Restricted Funds Liability Claims York Compen- Reserve Reserve Project sation Total Total 2016 2015 Fund Fund Fund Fund 2016 2015 $ $ $ $ $ $ $ $ OPERATING ACTIVITIES Cash collected from members, customers and other sources 2,720,758 2,161,823 1,466,361 550,000 - - 2,016,361 2,291,996 Investment income 13,042 28,273 17,177 - - 3,605 20,782 233,294 Cash paid to suppliers and employees (2,299,330) (2,095,436) (1,475,333) (652,494) (31,416) - (2,159,243) (2,422,790) 434,470 94,660 8,205 (102,494) (31,416) 3,605 (122,100) 102,500 INVESTING ACTIVITIES (Increase) decrease in investments (24,361) (56,433) (11,108) - - 10,465 (643) (195,679) Purchase of capital assets (9,362) (18,011) - - - - - - (33,723) (74,444) (11,108) - - 10,465 (643) (195,679) NET INCREASE (DECREASE) IN CASH 400,747 20,216 (2,903) (102,494) (31,416) 14,070 (122,743) (93,179) Cash position at the beginning of the year 356,469 325,407 13,730 771,737 65,494-850,961 954,986 Interfund transfers 14,070 10,846 - - - (14,070) (14,070) (10,846) CASH POSITION AT THE END OF THE YEAR 771,286 356,469 10,827 669,243 34,078-714,148 850,961 See accompanying notes to the financial statements
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 PURPOSE OF THE ORGANIZATION The Association of Ontario Land Surveyors (the "Association") is an organization whose principal object is to regulate the practice of professional land surveying in Ontario and to govern its members and holders of certificates of authorization in order that the public may be served and protected. The Association is a corporation without share capital created under the laws of the Province of Ontario. It is not subject to either federal or provincial income taxes. 1 SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. (a) Fund Accounting The Association follows the restricted fund method of accounting for contributions. Unrestricted contributions related to general operations are recognized as revenue in the General Operating Fund in the year in which the related expenses are incurred. Restricted contributions are recognized as revenue in the appropriate restricted fund in the year received. Revenues and expenses related to program delivery and administrative activities are reported in the General Operating Fund. The Liability Insurance Fund has been established to cover the costs of administering the professional liability master insurance policies. Member firms are covered by master policies with the Novex Insurance Company. The Association's deductibles under these policies are paid out of the Claims Reserve Fund. The Surveyors Act requires the Association to maintain the Compensation Fund to relieve or mitigate loss sustained by any person as a consequence of the dishonesty or incompetence of any member of the Association in the practice of professional land surveying. The Association entered into a contract with York University to assist the University with a project that will develop and implement a systematic approach to Competency-Based Assessment of the internationally educated land surveyors who enter York University's Geomatics Engineering program, based on the Competency Continuum developed by the Association. Revenues and expenses related to this project are reported in the York Project Fund. (b) Revenue Recognition Revenue for the Survey Review Department, the Survey Records Index and Continuing Education are recorded as deferred contributions and are recognized as revenue of the General Operating Fund in the year in which the related expenses are incurred. Fees and licences are recognized into income in the period to which they relate. Revenue from cost-related activities is recognized as revenue in the General Operating Fund in the year in which the goods are sold or when the services are rendered. Unrestricted investment income is recognized as revenue in the General Operating Fund when it is earned. Restricted investment income accrued on the restricted funds is recognized in the fund balances as it is earned.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 1 SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Capital Assets Capital assets are recorded at cost less accumulated amortization. Amortization is provided on a straight-line basis at the following annual rates: Building 1/30 Furniture and fixtures 1/10 Computer equipment 1/3 If there is an indication that the capital assets may be impaired, an impairment test is performed that compares carrying amount to net recoverable amount, which is normally determined by estimating the sales less direct costs on an undiscounted basis over the remaining life of the asset. There were no impairment indicators in 2016. (d) Donated Services The work of the Association is dependent on the voluntary services of many members. Since these services are not normally purchased by the Association and because of the difficulty of determining their fair value, donated services are not recognized in these financial statements. (e) (f) (g) (h) Inventory Inventory is recorded at the lower of cost and net realizable value, with cost being determined on a specific item basis. Collections The Association has a collection of historical artifacts and a library of books and publications. No value is placed on these collections in these financial statements. Management Estimates The preparation of 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 areas requiring the use of management estimates include amortization of capital assets, long-lived asset impairment assessments, and allocation of administration expenses to various departments within the Association. Actual results could differ from those estimates. Financial Instruments The Association initially measures its financial assets and financial liabilities at fair value, except for non-arm s length transactions. The Association subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments, which the Association elected to measure at fair value. Changes in fair value are recognized in the statement of operations. Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include accounts payable and accrued liabilities.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 1 SIGNIFICANT ACCOUNTING POLICIES (continued) (h) Financial Instruments (continued) Financial instruments that will be subsequently measured at amortized cost are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption. Transaction costs for financial instruments that will be subsequently measured at fair value are recognized in the statement of operations in the period they are incurred. 2 INVESTMENTS Fair Value 2016 2015 $ $ Guaranteed investment certificates (GICs) 828,182 850,592 Bonds 447,400 416,373 Equity 1,457,465 1,271,699 2,733,047 2,538,664 The GICs and bonds mature from April 2018 to January 2026, and earn interest at rates between 2.55% and 5.0% (2015-2.55% and 5.0%). 3 CAPITAL ASSETS 2016 2015 Accumulated Net Book Net Book Cost Amortization Value Value $ $ $ $ Building 577,077 (462,093) 114,984 111,473 Furniture and fixtures 228,601 (219,030) 9,571 13,782 Computer equipment 88,872 (84,943) 3,929 2,405 894,550 (766,066) 128,484 127,660 Amortization expense for the year was $8,537 (2015 - $11,403), of which $7,887 (2015 - $7,403) is included in office and general expense and $650 (2015 - $4,000) is included in the Survey Review Department expenses. 4 LEASE COMMITMENTS The Association is committed under the terms of its non-cancellable equipment leases to make payment of $1,080 in 2017.
5 DEFERRED REVENUE ASSOCIATION OF ONTARIO LAND SURVEYORS NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 Deferred revenue relates to amounts collected in advance and is recognized into income in the period in which the related expenses are incurred or when the service is rendered. Funds Revenue 2015 Received Recognized 2016 $ $ $ $ Fees and licences 266,162 1,398,232 1,308,014 356,380 Survey Review Department 232,562 619,990 529,832 322,720 Survey Review Index - 32,113 32,113 - Cost-related activities 45,609 418,053 312,109 151,553 Book sales 12,000 175,670-187,670 Continuing education 71,980 74,843 75,262 71,561 Internship program 36,546 - - 36,546 6 FINANCIAL INSTRUMENTS 664,859 2,718,901 2,257,330 1,126,430 The significant financial risks to which the Association is exposed are credit risk, liquidity risk and market risk. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Association is subject to credit risk in respect of its accounts receivable, but has historically suffered very few bad debts. Liquidity risk Liquidity risk is the risk that the Association will encounter difficulty in meeting obligations associated with financial liabilities. The Association is exposed to liquidity risk arising primarily from the accounts payable. The Association expects to meet these obligations as they come due by generating sufficient cash flow from operations. Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk, interest rate risk and other price risk. Currency risk Currency risk is the risk that the fair value or cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The company does not use derivative instruments to reduce its exposure to foreign currency risk. As at December 31, 2016, the balance sheet includes $501,251 (2015 - $404,965) of cash and investments investments, denominated in foreign currency and converted into Canadian dollars. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Association has investments in bonds and GICs yielding fixed interest rates. Changes in the market yield rate can cause fluctuations in the fair value of the investments. The Association does not use derivative financial instruments to alter the effects of this risk.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 6 FINANCIAL INSTRUMENTS (continued) Other price risk Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices other than those arising from interest rate risk or currency risk, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Association is exposed to other price risk through its investments in marketable securities invested in equity securities traded in an active market. 7 BUDGET The budget figures are presented for comparison purposes only. They are unaudited and have been reclassified to conform with these financial statements. 8 TRANSFERS During the year, the Association's Council internally restricted $235,000 (2015 - $150,000) and $3,000 (2015 - $20,000) to be used for discipline related matters and major building repairs, respectively. Transfers of this amount were made from the unrestricted fund balance to the discipline reserve and building reserve funds within the General Operating Fund. The internally restricted amount is not available for unrestricted purposes without approval of the Council. In 2007, the Council passed a motion to allow the Compensation Fund to accumulate to a maximum of $150,000. Accordingly, in the year ended December 31, 2016, $14,070 was transferred from the Compensation Fund to the General Operating Fund (2015 - $2,251 transferred from General Operating Fund). 9 ALLOCATION OF EXPENSES 2016 2015 $ $ Salaries, benefits and consultants: Survey Review Department 27,600 27,600 Survey Records Index 3,000 3,000 Office and general: Survey Review Department 16,200 16,200 Building: Survey Review Department 14,700 14,700 Amortization: Survey Review Department 650 4,000