FINANCIAL STATEMENTS DECEMBER 31, 2013
C H A R T E R E D A C C O U N T A N T S INDEPENDENT AUDITOR'S REPORT To the Members, Junction Day Care Centre Report on the Financial Statements We have audited the accompanying financial statements of Junction Day Care Centre which comprise the statement of financial position as at December 31, 2013, and the statements of operations and changes in net assets 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 our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Junction Day Care Centre as at December 31, 2013, and its financial performance and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Accountants Licensed Public Accountants February 10, 2014 Toronto, Ontario 187 Gerrard Street East Toronto Canada M5A 2E5 Telephone 416/323-3200 Facsimile 416/323-9637
STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2013 ASSETS Current assets Cash $ 156,843 $ 89,767 Short-term investments (note 3) 122,790 121,752 Amounts receivable from governments 5,284 2,097 Other accounts receivable 4,099 491 Prepaid expenses 4,306 338 LIABILITIES AND NET ASSETS $ 293,322 $ 214,445 Current liabilities Accounts payable and accrued liabilities $ 16,414 $ 15,820 Amounts payable to governments 5,536 4,200 Parent deposits 45,299 8,700 Deferred revenue (note 4) 21,821 28,406 89,070 57,126 Net assets Unrestricted 204,252 157,319 $ 293,322 $ 214,445 Approved on behalf of the Board:, Director, Director see accompanying notes Page 1
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2013 REVENUE Parent fees $ 700,670 $ 607,193 Government funding (note 5) 227,422 205,742 Interest 1,042 1,069 Fundraising 2,157 3,875 931,291 817,879 EXPENSES Salaries and employee benefits (note 5) 791,550 723,093 Food 31,663 30,168 Program supplies and minor equipment 16,760 8,626 Trips 10,725 11,564 Professional fees 8,888 8,006 Office and general 7,517 6,899 Professional development 6,030 1,637 Insurance 4,812 4,061 Household supplies 3,298 4,323 Fundraising 1,597 1,318 Occupancy costs 1,518 884,358 799,695 EXCESS OF REVENUE OVER EXPENSES FOR THE YEAR 46,933 18,184 Net assets, beginning of year 157,319 139,135 NET ASSETS, END OF YEAR $ 204,252 $ 157,319 see accompanying notes Page 2
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 OPERATING ACTIVITIES Excess of revenue over expenses for the year $ 46,933 $ 18,184 Adjustments for items not involving cash Net change in non-cash working capital items (see below) 21,181 36,498 Net cash generated from operating activities 68,114 54,682 INVESTING ACTIVITIES Purchase of short-term investments (1,038) (1,112) NET INCREASE IN CASH FOR THE YEAR 67,076 53,570 Cash, beginning of year 89,767 36,197 CASH, END OF YEAR $ 156,843 $ 89,767 Net change in non-cash working capital items: Decrease (increase) in current assets- Accounts receivable $ (6,794) $ 478 Prepaid expenses (3,968) (338) Increase (decrease) in current liabilities- Accounts payable and accrued liabilities 1,929 5,617 Parent deposits 36,599 2,335 Deferred revenue (6,585) 28,406 $ 21,181 $ 36,498 see accompanying notes Page 3
NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 Junction Day Care Centre is incorporated as a not-for-profit corporation without share capital in the Province of Ontario. The organization is exempt from income tax in Canada as a not-for-profit organization under Section 149(1)(L) of the Income Tax Act (Canada). The organization provides comprehensive child care programs for children from the ages of 2 1/2 to 12 years. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the preparation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations. Outlined below are those policies considered particularly significant: Capital assets Capital assets are capitalized in the accounts and recorded at cost. Amortization is provided annually at rates calculated to write-off the assets over their estimated useful lives. Revenue recognition The organization follows the deferral method of revenue recognition. Its principal sources of revenue and recognition of these revenues for financial statement purposes are as follows: i) Government grants related to current expenditures are reflected in the accounts as revenue in the current year. Grants received in the year for expenses to be incurred in the following fiscal year are recorded as deferred revenue. Grants related to the purchase of capital assets are recorded as revenue in the same period the related assets are charged to operations. ii) iii) iv) Child care fees consist of direct payments from parents and fees subsidized by Toronto Children's Services. Fee revenue is recognized in the period the child care services are provided. Fundraising and donation revenue is recorded when funds are received. Donated materials and services which are normally purchased by the organization are not recorded in the accounts. Investment income is recognized in the period earned. 2. FINANCIAL INSTRUMENTS AND RELATED FINANCIAL RISKS The organization s financial instruments include cash, short-term investments, accounts receivable and accounts payable and accrued liabilities. Cash is measured at fair value. Short-term investments are measured at fair value calculated at original purchase price plus accrued interest. All other financial instruments are recorded at cost. The following are those financial instruments considered particularly significant and their related financial risks: i) Accounts receivable are regularly monitored to minimize credit risk from uncollected revenue. The organization s losses from uncollected revenue have been minimal. ii) Fluctuations in market interest rates do not result in significant interest rate risks affecting future cash flows from fixed rate guaranteed investments certificates. iii) The organization expects to meet its financial obligations for accounts payable and accrued liabilities through cash flows from operations. It is management s opinion that the organization's financial instruments are not exposed to significant financial risks. Page 4
NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 3. SHORT-TERM INVESTMENTS Short-term investments comprise guaranteed investment certificates issued by a major Canadian chartered bank with interest rates ranging from 0.8% to 0.9% and investment in a money market fund administered by the same bank. 4. DEFERRED REVENUE Deferred revenue is composed of the following: Salary grants $ 21,821 $ 28,406 Continuity of deferred revenue for the year is as follows: Deferred revenue, beginning of year $ 28,406 $ nil Add cash received from government funding in year 220,837 234,148 Less government funding recognized in year (note 5) (227,422) (205,742) Deferred revenue, end of year $ 21,821 $ 28,406 5. GOVERNMENT FUNDING Government funding recognized in the year was as follows: Toronto Children's Services Fee subsidy $ 109,099 $ 87,888 Salary grants Wage Subsidy 93,992 93,992 Special Needs Resourcing 1,470 600 Pay Equity 1999-2005 14,416 14,416 Wage Improvement 5,216 5,216 Human Resources Skills Development Canada - salary grant 3,229 3,630 $ 227,422 $ 205,742 Salaries and benefits include payments to staff funded by salary grants in 2013 of $118,323 ($117,854 in 2012). 6. LEASE COMMITMENTS The organization leases and pays for space on an annual basis from the Toronto District School Board (the TDSB) for care provided to children in the extended day program. For all other care programs, the organization leases space from the TDSB and this rent is paid on behalf of the organization by the City of Toronto. The fair value of rent for these programs is not reflected in these financial statements. Page 5