Financial Statements April 30, 2014
KPMG LLP Telephone (403) 691-8000 205-5 th Avenue SW Fax (403) 691-8008 Suite 3100, Bow Valley Square 2 www.kpmg.ca Calgary AB T2P 4B9 INDEPENDENT AUDITORS' REPORT To the Board of Governors of Ambrose University College Ltd. We have audited the accompanying financial statements of Ambrose University College Ltd., which comprise the statement of financial position as at April 30, 2014, the statements of operations, changes in net assets 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 an 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. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Ambrose University College Ltd. as at April 30, 2014, and its results of operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.
Comparative Information Without modifying our opinion, we draw attention to Note 17 to the financial statements which indicates that the comparative information presented as at and for the year ended April 30, 2013, has been restated. The financial statements of Ambrose University College Ltd. as at and for the year ended April 30, 2013, excluding the restatement described in Note 17 to the financial statements, were audited by another auditor who expressed an unmodified opinion on those financial statements on September 27, 2013. As part of our audit of the financial statements as at and for the year ended April 30, 2014, we audited the restatement described in Note 17 to the financial statements that was applied to restate the comparative information presented as at and for the year ended April 30, 2013. In our opinion, the restatement is appropriate and has been properly applied. We were not engaged to audit, review, or apply any procedures to the April 30, 2013 financial statements other than with respect to the restatement described in Note 17 to the financial statements. Accordingly, we do not express an opinion or any other form of assurance on those financial statements taken as a whole. Chartered Accountants August 26, 2014 Calgary, Canada
Statement of Operations Year Ended April 30, 2014 with comparative information for 2013 (restated note 17) Revenue Tuition and student fees $ 6,209,272 $ 5,749,005 Donations and constituent support 4,645,310 3,558,240 Government grants 2,663,175 2,586,014 Sales, rent and ancillary, net (note 12) 1,256,472 1,081,833 Endowment and other 552,408 317,174 Total revenue 15,326,637 13,292,266 Expenses Employee compensation, benefits and other 8,803,119 7,865,672 Operating supplies 977,549 652,715 Interest 925,456 773,981 Scholarships, bursaries and grants 746,904 748,685 Facilities 677,480 740,482 Communications, advertising and events 561,426 465,293 Annuity payments 408,838 433,241 Travel and hospitality 350,876 306,410 Professional and other fees 296,780 136,730 Total expenses 13,748,428 12,123,209 Excess of revenue over expenses before the following 1,578,209 1,169,057 Amortization of capital assets (1,998,260) (1,904,454) Change in fair value of interest rate swap (note 7) (1,375,284) - Changes in fair value of investments 203,236 323,953 Deficiency of revenue over expenses $ (1,592,099) $ (411,444) The accompanying notes are an integral part of these financial statements 4
Statement of Changes in Net Assets Year ended April 30, 2014 with comparative information for 2013 Unrestricted Externally restricted 2014 Invested in capital assets Balance, beginning of year $ (2,057,772) $ 5,450,778 $ 6,166,931 $ 9,559,937 Excess (deficiency) of revenue over expenses 2,343,088 195 (3,935,382) (1,592,099) Direct increases in net assets: Restricted contributions received - 392,615-392,615 Change in fair value of investments - 555,333-555,333 Investment income - 252,964-252,964 Transfers of net assets: Net change in investment in capital assets (note 11) (1,366,671) - 1,366,671 - Balance, end of year $ (1,081,355) $ 6,651,885 $ 3,598,220 $ 9,168,750 Total Externally restricted 2013 Invested in capital assets Unrestricted Total Balance, beginning of year, as previously reported $ (2,507,456) $ 4,518,442 $ 7,285,160 $ 9,296,146 Prior period adjustment (note 17) (275,514) 573,803-298,289 Balance, beginning of year, as restated (2,782,970) 5,092,245 7,285,160 9,594,435 Excess (deficiency) of revenue over expenses 2,091,011 (987) (2,501,468) (411,444) Direct increases in net assets: Change in fair value of investments - 100,516-100,516 Restricted contributions received - 276,431-276,431 Transfers of net assets: Net change in investment in capital assets (note 11) (1,383,239) - 1,383,239 - Other 17,426 (17,426) - - Balance, end of year $ (2,057,772) $ 5,450,778 $ 6,166,931 $ 9,559,937 The accompanying notes are an integral part of these financial statements 5
Statement of Cash Flows Year Ended April 30, 2014 with comparative information for 2013 Cash flow from operating activities: Cash received from students $ 5,689,905 $ 5,430,144 Cash received from donors and constituents 4,075,489 3,113,843 Government funding received 2,682,075 2,586,014 Cash received from customers, tenants and others 2,782,247 2,423,456 Cash paid to employees, suppliers and students (13,062,843) (11,905,451) Cash paid to annuitants (420,286) (436,117) Interest and dividends received 92,968 283,478 Interest paid (903,517) (769,799) Net cash flow from operating activities 936,038 725,568 Cash flow from financing activities: Capital contributions received 574,440 718,870 Restricted contributions received 565,551 276,431 Cash received from annuitants 21,000 130,000 Repayment of loans and borrowings (485,163) (876,119) Advances of loans and borrowings 7,200 600 Net cash flow from financing activities 683,028 249,782 Cash flow from investing activities: Capital expenditures (306,704) (299,700) Net proceeds from the sale of investments 1,651,472 460,457 Net cash flow from investing activities 1,344,768 160,757 Increase in cash 2,963,834 1,136,107 Net cash position, beginning of year 415,739 (720,368) Net cash position, end of year $ 3,379,573 $ 415,739 Non-cash transactions (note 14) The accompanying notes are an integral part of these financial statements 6
1. Purpose of the organization Ambrose University College Ltd. ( Ambrose ) is a Christian university offering provincially accredited undergraduate arts and science degrees, and undergraduate and post-graduate degrees in ministry and theology. Ambrose was incorporated in Alberta on September 12, 2003 as Canadian Bible College/Canadian Theological Seminary Ltd. On March 24, 2004, after receiving accreditation by the Province of Alberta, the name was changed to Alliance University College Ltd. On May 2, 2007, the name was changed to Ambrose University College Ltd. Also on May 2, 2007, Canadian Nazarene University College Ltd., a separately accredited institution, transferred all of its net assets, operations and degree granting authority to Ambrose. The financial statements of Ambrose include 1282185 Alberta Ltd., a wholly-owned and bare trustee corporation that holds title to certain real property. There are no operations in 1282185 Alberta Ltd. Ambrose is a registered charity under the Income Tax Act, Canada. Ambrose is not subject to income taxes under the Income Tax Act and, as such, no provision for income taxes is included in these financial statements. 2. Significant accounting policies The financial statements of Ambrose have been prepared by management in accordance with the Canadian Accounting Standards for Not-For-Profit Organizations in Part III of the CPA Handbook (the Standards ). The following is a summary of significant accounting policies followed in preparation of the financial statements. a. Use of estimates and judgement The preparation of financial statements in accordance with the Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the recorded amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In preparing the financial statements, the significant judgments made by management in applying Ambrose s accounting policies and the key sources of estimation were the allowance for doubtful accounts, amortization rates and useful lives of capital assets, and impairment of long-lived assets. b. Revenue recognition Ambrose follows the deferral method of accounting for contributions, which include donations and government grants. i. Unrestricted contributions are recognized when received or receivable if the amount receivable can be reasonably estimated and collection is reasonably assured. 7
ii. iii. iv. Contributions externally restricted for purposes other than scholarships, endowments and capital assets are deferred and recognized as revenue in the year in which related expenses are recognized. Endowment contributions are recognized as direct increases in net assets in the year in which they are received. Investment income on endowment net assets is recognized as revenue in the year in which related expenses are recognized. Contributions restricted for the acquisition of capital assets are recognized as revenue in amounts that match the amortization expense of the related capital assets purchased with the contributions. Revenue resulting from the maturity of annuities designated for operating purposes is recognized upon maturity of the annuity. Annuities designated for capital purposes are recognized as deferred capital contributions upon maturity of the annuity. Student tuition and non-academic fees are recognized as revenue in the academic year to which they relate. Registration deposits and tuition fees for the following academic year are deferred. Sales and ancillary revenue is recognized when goods are sold or services are performed. Rental revenue is recognized in the period during which occupancy took place. c. Cash and cash equivalents Cash and cash equivalents include deposits in banks, certificates of deposit and other short-term investments with original maturities of three months or less at the date of acquisition. d. Capital assets Capital assets, except land and mineral rights, are measured at cost less accumulated amortization. Land and mineral rights are carried at cost and not amortized. Cost includes expenditures that are directly attributable to the acquisition of the asset. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Asset category Buildings Library materials Parking lot and sidewalks Furnishings Equipment and computers Term 30-40 years 12-15 years 7 years 3-10 years 3 10 years Estimated useful lives of capital assets are reviewed annually and adjusted if appropriate. Any changes are accounted for prospectively. e. Investments Investments are recorded at market value, which is determined from published price quotations, and corresponding unrealized gains or losses that occur due to changes in prevailing market values are reported on the statement of operations for unrestricted funds and as direct increases in net assets for restricted funds. 8
f. Inventory Inventory is recorded at the lower of cost and net realizable value. The cost of inventory is determined on a first-in, first-out basis and includes expenditures incurred in acquiring the inventory and in bringing it to its existing location and condition. In any requirement for an inventory obsolescence provision, management estimates the likelihood that inventory carrying values will be affected by changes in market demand which would make inventory on hand obsolete. Cost of goods sold is comprised of inventory expensed in the year. g. Annuity contracts Annuity contracts are recorded at the amount received for the annuity. Until the annuity matures, the difference between the face value of the contracts and the estimated actuarial liability is treated as deferred revenue. Annuity contracts wherein Ambrose is not the beneficiary upon maturity are recorded as loans and borrowings. Periodic annuity payments are recorded as expenses on the statement of operations. h. 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. Ambrose has not elected to carry any such financial instruments at fair value. Transaction costs incurred on the acquisition of financial instruments measured subsequently at fair value are expensed as incurred. All other financial instruments are adjusted by transaction costs incurred on acquisition and financing costs, which are amortized using the straight-line method. Financial assets are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators of impairment. If there is an indicator of impairment, Ambrose determines if there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount Ambrose expects to realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial carrying value. 9
3. Accounts receivable Accounts receivable at April 30 comprises the following: Student accounts receivable $ 110,987 $ 142,624 Government funding receivable 149,334 149,334 Trade and other receivables 16,107 82,628 Goods and Services Tax recoverable 24,716 13,319 Accrued interest on investments - 10,519 $ 301,144 $ 398,424 4. Investments Fair values of investments are based on quoted market prices on the date of the statement of financial position. Investments at April 30 comprise the following: Common shares and mutual funds $ 4,002,565 $ 4,938,070 Fixed income 1,788,183 1,331,646 $ 5,790,748 $ 6,269,716 5. Capital assets The net carrying amount of capital assets at April 30 is as follows: Cost 2014 Accumulated amortization Net book value Land $ 3,493,741 $ - $ 3,493,741 Buildings 41,975,391 5,928,072 36,047,319 Library materials 3,049,535 1,970,106 1,079,429 Furnishings 934,195 513,324 420,871 Equipment and computers 1,574,104 1,160,341 413,763 Parking lot and sidewalks 1,218,989 985,080 233,909 Mineral rights 18,000-18,000 $ 52,263,955 $ 10,556,923 $ 41,707,032 10
Cost 2013 Accumulated amortization Net book value Land $ 3,493,741 $ - $ 3,493,741 Buildings 41,946,798 4,731,521 37,215,277 Library materials 2,942,173 1,712,576 1,229,597 Furnishings 1,183,135 661,230 521,905 Equipment and computers 1,772,858 1,259,580 513,278 Parking lot and sidewalks 1,218,989 810,169 408,820 Mineral rights 18,000-18,000 $ 52,575,694 $ 9,175,076 $ 43,400,618 6. Accounts payable and accrued liabilities Accounts payable and accrued liabilities at April 30 comprise the following: (restated note 17) Trade accounts payable $ 799,198 $ 668,624 Government payroll remittances payable 195,537 168,264 Accrued annuity payments 59,155 70,602 $ 1,053,890 $ 907,490 7. Loans and borrowings Loans and borrowings at April 30 comprise the following: notes Current liabilities Constituent loans a) $ 203,850 $ 193,986 Current portion of other loans and borrowings 1,991,523 8,977,042 2,195,373 9,171,028 Non-current liabilities Construction loan b) 411,500 411,500 Annuity contracts c) 930,717 987,322 Mortgage financing d) 16,928,037 8,993,538 18,270,254 10,392,360 $ 20,465,627 $ 19,563,388 a) Constituent loans Various constituents have advanced funds to Ambrose, repayable on demand, to provide cash for capital and operating purposes. The loans are unsecured and bear interest at rates from 0% to 3.5%. The effective annual rate of interest at April 30, 2014 is 2.4%. 11
b) Construction loan In 2011, Ambrose received loan proceeds from The Western Canadian District of the Christian and Missionary Alliance, a related party, for the purpose of building construction. The loan is unsecured, has no fixed terms of repayment and bears interest at bank prime rate plus 0.5% (an effective annual rate of 3.5% at April 30, 2014). c) Annuity contracts Ambrose has entered into annuity contracts which pay the annuitants on a periodic basis for the lifetime of the annuitant, in exchange for a fixed amount received from the annuitant upon inception of the contract. In accordance with the terms of the annuity contracts, upon maturity the residual annuity amount must be paid to third parties over the time period stipulated in the individual annuity contract. Annuity payment rates vary depending on the anticipated time to maturity and range from 2.6% to 9.0% per annum. The effective annual rate on the contracts at April 30, 2014 is 5.5%. Annuity contracts not yet matured $ 906,551 $ 947,051 Matured annuity contracts 43,468 62,771 950,019 1,009,822 Current portion of matured annuity contracts (19,302) (22,500) $ 930,717 $ 987,322 d) Mortgage financing Mortgage financing at April 30 comprises the following: Amount Monthly payment including interest Interest rate Maturity $20.4 million $128,292 4.26% August 23, 2033 $ 20,256,058 $ - $5 million 29,430 5.8% September 15, 2038-4,676,656 $5 million 31,058 5.6% September 15, 2033-4,521,424 $10 million - variable 1 September 15, 2013-8,750,000 Total financing 20,256,058 17,948,080 Deferred financing costs, net of accumulated amortization (2,731,084) - Fair value of interest rate swap 1,375,284-18,900,258 17,948,080 Current portion of mortgage financing: Principal amount due in the next year, net of amortization of deferred financing costs (596,937) (8,954,542) Fair value of interest rate swap (1,375,284) - $ 16,928,037 $ 8,993,538 1 Interest paid at the Canadian bankers acceptance rate plus 1.15%, an effective annual interest rate of 2.4% at April 30, 2013. 12
During 2014, Ambrose repaid mortgage financing with funds advanced from a Canadian bank. As a condition of the repayment of the existing borrowings, Ambrose incurred financing fees totalling $2.7 million which were funded by and added to the new bank financing. Repayment of the bank financing is over a 20-year period to August 2033. The financing fees are amortized over the term of the repayment of the bank financing and included in interest expense on the statement of operations (2014 - $138,400). The bank financing bears interest at the bank s prime rate. Upon receiving the funds advanced under the bank financing, Ambrose entered into an interest rate swap arrangement that secures an interest rate of 4.26% on the bank financing for 15 years. The change in the fair market value of the interest rate swap is included on the statement of operations. The bank financing is secured with by a mortgage providing a first charge on land and buildings with a net carrying amount of $40 million and a General Security Agreement over net assets. Annual scheduled repayment of the bank financing is as follows: e) Financial covenants Years ending April 30 Amount 2015 $ 690,000 2016 720,000 2017 751,000 2018 784,000 2019 818,000 Thereafter 16,493,058 $ 20,256,058 Ambrose is required to comply with certain financial covenants under its bank financing. Ambrose is in compliance with these covenants at April 30, 2014. f) Available borrowing Ambrose has a $0.5 million demand reducing facility for capital expenditures, bearing interest at the bank s prime rate plus 0.5%. This facility was unutilized at April 30, 2014. Ambrose has $0.5 million available through a bank line of credit that may be used to fund short-term cash deficiencies. Advances bear interest at the bank s prime rate plus 0.5%. This facility was unutilized at April 30, 2014. 8. Annuity contracts Ambrose has entered into annuity contracts with donors who desire to make a charitable donation to Ambrose. These contracts pay the annuitants a periodic fixed amount for the lifetime of the annuitant, in exchange for a fixed amount received from the annuitant upon inception of the contract. Annuity payment rates vary depending on the anticipated time to maturity and range from 2.6% to 15.0% per annum. 13
Changes in annuity contracts for the years ended April 30 comprise: Balance, beginning of year $ 6,219,932 $ 6,226,432 New annuities contracts 21,000 130,000 Matured annuity contracts (804,833) (136,500) Balance, end of year $ 5,436,099 $ 6,219,932 Matured annuity contracts for the years ended April 30 were recognized as follows: Donations and constituent support revenue $ 206,833 $ 136,500 Deferred capital contributions 518,000 - Externally restricted net assets - scholarships 80,000 - $ 804,833 $ 136,500 At April 30, 2014, scheduled annual annuity payments, assuming no annuities mature during the subsequent year is $382,000. The weighted-average annuity payment rate at April 30, 2014 is 6.8%. Based upon the annuitants designations in the annuity contracts, annuities at April 30 will be derecognized upon maturity as follows: Donation and constituent support revenue $ 1,774,316 $ 1,981,149 Deferred capital contributions 3,421,833 3,918,833 Externally restricted net assets - scholarships 239,950 319,950 $ 5,436,099 $ 6,219,932 9. Deferred capital contributions Deferred capital contributions represent restricted funds received and designated to be used for capital purposes. Changes in deferred capital contributions for the years ended April 30 comprise the following: Balance, beginning of year $ 13,812,646 $ 13,556,024 Cash contributions received 574,440 718,870 Contributions resulting from matured annuities 518,000 - Contributions recognized as revenue (615,063) (462,248) Balance, end of year $ 14,290,023 $ 13,812,646 Capital contributions recognized as revenue are included in donations and constituent support on the statement of operations. 14
10. Externally restricted net assets Externally restricted net assets at April 30 comprise the following: (restated note 17) Endowed scholarships $ 5,028,328 $ 4,168,187 Other endowments 1,623,557 1,282,591 $ 6,651,885 $ 5,450,778 11. Investment in capital assets Net assets invested in capital assets at April 30 comprise the following: Capital assets $ 41,707,032 $ 43,400,618 Amounts financed by: Loans and borrowings (20,396,956) (19,502,208) Annuity contracts (3,421,833) (3,918,833) Deferred capital contributions (14,290,023) (13,812,646) $ 3,598,220 $ 6,166,931 Net change in investment in capital assets for the years ended April 30 comprises: Capital expenditures $ 306,704 $ 299,700 Payments of principal and interest on loans and borrowings 1,399,194 1,646,539 Annuity payments 256,213 285,870 Amounts financed by: Deferred capital contributions (574,440) (718,870) Annuity contracts (21,000) (130,000) $ 1,366,671 $ 1,383,239 15
12. Sales, rent and ancillary revenue, net Sales, rent and ancillary revenue for the years ended April 30 is comprised of the following: Revenue Rental $ 1,315,134 $ 1,139,207 Sales 1,235,606 1,138,224 Events 118,806 112,847 Total revenue 2,669,546 2,390,278 Expenses Cost of goods sold 656,512 536,651 Contract services 596,712 599,364 Other 159,850 172,430 Total expenses 1,413,074 1,308,445 Sales, rent and ancillary revenue, net $ 1,256,472 $ 1,081,833 13. Contributed goods and services Ambrose receives contributions of certain goods and services. Contributions of goods that have an independently determinable fair value are recorded as donation revenue. Consumption or use of these goods is reflected as expenses. Amounts recognized in the statement of operations for the years ended April 30 are as follows: Donation revenue $ 11,176 $ 11,162 Operating supplies 11,176 11,162 14. Non-cash transactions The following non-cash investing and financing transactions are excluded from the statement of cash flows for the years ended April 30: Capital contributions resulting from matured annuities $ 518,000 $ - Restricted net asset contributions resulting from matured annuities 80,000 - Financing fees incurred 2,790,939 - Reduction in loans and borrowings resulting from matured annuities 25,612 44,000 Accrued interest added to loan balances 2,663 3,595 16
15. Related party transactions During the year ended April 30, 2014, Ambrose received contributions of $1.5 million from district and national offices within the denominations of the Christian and Missionary Alliance in Canada and the Church of the Nazarene in Canada and in the United States, which are affiliated with Ambrose. These transactions are in the normal course of operations and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties. 16. Financial risks and concentration of credit risk Currency risk: Currency risk is the risk associated with transacting in and holding balances that are denominated in foreign currencies. In the normal course of operations, Ambrose makes purchases of goods and services and receives revenue denominated in foreign currencies. At times a portion of investments may be denominated in a foreign currency. There has been no change to currency risk exposure during the year. Liquidity risk: Liquidity risk is the risk that Ambrose will be unable to fulfill its obligations on a timely basis or at a reasonable cost. Ambrose manages its liquidity risk by monitoring its operating cash flow requirements, and by preparing budgets and cash flow forecasts to ensure it has sufficient funds to meet its obligations. Ambrose has a $0.5 million line of credit available upon which it can draw at any time to cover any short-term liquidity needs. There has been no change to liquidity risk exposure during the year. Credit risk: Credit risk is the risk that a counter-party will default on its contractual obligations resulting in a financial loss to Ambrose. Credit risk arises principally from Ambrose s cash deposits, and receivables from students and third parties. Ambrose holds its cash and cash equivalents in a large Canadian financial institution. Management assesses on a continuous basis its accounts receivable and makes a provision for any amounts that are not collectible. There has been no change to credit risk exposure during the year. Interest rate risk: Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. Ambrose is exposed to interest rate risk on interest-bearing investments and cash deposits, and certain loans and borrowings that bear interest at rates that fluctuate with market interest rates. As a result of the financing changes undertaken in 2014, Ambrose has reduced its interest rate exposure to increases in market interest rates. Market risk: Market risk is the risk that the value of financial assets will change resulting in a financial loss. Ambrose is exposed to market risk on its investments. Ambrose manages its investment portfolio to earn investment income and invests according to guidelines established by the Board of Governors. Ambrose is not involved in any hedging relationships through its operations and does not hold or use any derivative financial instruments for trading purposes. There has been no change to market risk exposure during the year. 17
17. Prior year restatement In preparing the financial statements for the year ended April 30, 2014, the following corrections to previously reported amounts as at and for the year ended April 30, 2013 have been made: a. Presentation of scholarships: A portion of endowed scholarships was previously incorrectly included in accounts payable and accrued liabilities. This restatement had the following effects: i. Unrestricted net assets at May 1, 2012 have been reduced by $275,514 and externally restricted net assets increased by $573,803, resulting in a net increase in net assets and a reduction in accounts payable and accrued liabilities of $298,289. ii. Accounts payable and accrued liabilities and unrestricted net assets at April 30, 2013 have been reduced by $318,832 and externally restricted net assets and total net assets increased by $318,832. b. Changes in fair value of investments: Changes in fair value of investments representing restricted net assets, previously included on the statement of operations, have been restated to reflect direct increases in externally restricted net assets. This restatement had the following effects: i. Income from changes in fair value of investments for the year ended April 30, 2013 has been reduced and deficiency of revenue over expenses increased by $100,516. ii. Direct increase in externally restricted net assets resulting from changes in fair value of investments on the statement of changes in net assets has been increased by $100,516. This correction had no effect on the statement of financial position at April 30, 2013. c. Certain comparative figures for the year ended April 30, 2013, have been reclassified to conform to the financial statement presentation adopted in the current year. 18. Financial Information Return for purposes of the Charitable Fund-raising Act of Alberta In accordance with Section 8 of the Charitable Fund-raising Act of Alberta the following amounts are disclosed in addition to those disclosures reflected elsewhere in these financial statements which together comprise the Financial Information Return of Ambrose: Donations $ 3,676,991 $ 2,340,870 Total direct expenses incurred for soliciting contributions 365,477 271,491 Remuneration to employees whose principal duties involved fundraising 226,650 191,281 18