Financial Statements for the Year Ended March 31, 2012 and Auditor's Report
Index to the Financial Statements March 31, 2012 Auditor's Report.......................................... 1 Statement of Financial Position.............................. 2 Statement of Operations................................... 3 Statement of Cash Flows.................................... 4 Notes to the Financial Statements............................ 5
INDEPENDENT AUDITOR'S REPORT To the Shareholders of Hope's Home Incorporated I have audited the accompanying financial statements of the Hope's Home Incorporated, which comprise the Statement of Financial Position as at March 31, 2012 and the statements of Operations and of 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 generally accepted accounting principles 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 My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I 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 amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk 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. I believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for my opinion. Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of Hope's Home Incorporated as at March 31, 2012, and its financial performance and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles CHARTERED ACCOUNTANT PROFESSIONAL CORPORATION Regina, Saskatchewan June 16, 2012
HOPE'S HOME INCORPORATED STATEMENT OF FINANCIAL POSITION MARCH 31, 2012 2011 (Restated) ASSETS Current Assets Cash Accounts Receivable Capital Assets (Note 3 and 6) TOTAL ASSETS LIABILITIES Current Liabilities Accounts Payable Salaries Payable 90,459 22,943 160,286 4,684 113,402 164,970 746,552 774,882 859,954 939,852 8,545 8,545 3,638 33,802 37,440 Mortgage Payable (Note 4) 495,994 506,168 Total Liabilities 504,539 543,608 355,415 355,415 396,244 396,244 859,954 939,852 Net Assets Unrestricted Net Assets (Note 6) Restricted Net Assets TOTAL LIABILITIES AND NET ASSETS On behalf of the Board: Director Director -2-
HOPE'S HOME INCORPORATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2012 2011 (Restated) REVENUE Day Care Fees - Caregivers Day Care Fees - Ministry of Social Services Donations and Fund Raising Provincial Grants Foundation Grants RCMP and Radiothon Interest and Other Income EXPENSES Amortization Bank Charges Building Repairs and Maintenance Miscellaneous Mortgage Interest Occupancy Costs and Supplies Office Professional Fees Salaries, Benefits, Contracts Staff Development & Other Personnel Expense 257,438 84,404 372,908 1,005,316 68,818 4,987 191,568 75,490 274,750 909,767 8,280 5,767 1,793,871 1,465,622 51,907 1,576 11,757 34,832 147,228 22,989 6,451 1,524,342 33,620 48,454 1,924 16,719 38,494 113,789 23,903 10,507 1,249,713 37,728 1,834,701 1,541,231 Increase (Decrease) in Net Assets (40,829) (75,609) Net Assets, Beginning of the Year 396,244 471,853 355,415 396,244 NET ASSETS, END OF THE YEAR -3-
HOPE'S HOME INCORPORATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2012 2011 (Restated) Net Cash Provided (Used) By: Operating Activities Excess of Revenue Over Expenses (40,829) (75,608) 51,907 48,454 (18,259) 4,907 (33,802) (1,077) (260) (21,772) 4,753 25,345 (36,076) (50,263) (10,174) (7,751) (10,174) (7,751) Additions to Capital Assets - Betterments Additions to Capital Assets - Equipment Additions to Capital Assets - Other (8,417) (15,160) (36,371) (4,035) (67,371) Net Cash (Used) Provided by Investing Activities (23,577) (107,777) Increase (Decrease) in Cash Position (69,827) (165,791) Cash Balance, Beginning of Period 160,286 326,077 90,459 160,286 Add: Amortization Not Affecting Cash Changes in Non-cash Working Capital Items Accounts Receivable Loan Fund Receivable Accounts Payable Salaries Payable Net Cash (Used) Provided by Operations Financiing Activities Change in Mortgage Payable Net Cash (Used) Provided by Financing Activities Investing Activities CASH BALANCE, END OF PERIOD - -4-
HOPE S HOME INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 1. Status of the Organization Hope s Home Incorporated was incorporated pursuant to the provisions of The Non-profit Corporation s Act, 1995 of Saskatchewan on March 31, 2004. Hope s Home was established to operate a home to provide exceptional care for children with complex medical needs through partnerships with provincial agencies, organizations and the community. Hope s Home Incorporated is a federally registered charitable organization. Currently, the net income of organizations of this nature are not subject to taxation under the provisions of the Canadian Income Tax Act. As a result these financial statements do not include a provision for current or future income taxes. 2. Significant Accounting Policies These financial statements have been prepared in accordance with Canadian generally accepted accounting principles that are considered appropriate for Non-Profit Organizations. The following items are considered significant: Revenue Recognition Hope s Home accounts for revenue transactions using the accrual method of accounting. All revenue is recognized as income in the period within which Hope s Home is entitled to receive the revenue. Fund Accounting Hope s Home accounts for its operations using the principals of fund accounting. Currently, the operations of the organization are accounting for using only the following fund. Hope s Home - The organization uses this fund to account for the revenue, expenses, assets and net assets associated with the day to day operations of Hope s Home. Charitable donation receipts are issued for contributions to this fund. Capital Assets Capital assets are stated at cost less accumulated amortization. Amortization is calculated using the straight line method designed to charge the cost of the assets to income over the expected life of the related asset. Measurement Uncertainty (Use of Estimates) The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions respecting assets, liabilities, revenues and expenses. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the revenue and expenses during the reporting period. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. -5-
HOPE S HOME INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 2. Significant Accounting Policies (continued) Income Taxes Currently, pursuant to Section 149 of the Canadian Income Tax Act, the net income of the organization is exempt from taxation. GST Recoverable As a qualifying non-profit organization and a charitable organization, Hope s Home is entitled to receive a rebate equivalent to 50% of the GST it pays for supplies and services. The organization accounts for this rebate as revenue in the period in which the qualifying expenses are made. Financial Instruments Hope s Home recognizes financial assets and liabilities in its financial statements when the organization becomes party to the contractual provision of the financial instrument. Financial assets and liabilities originated in an arm s length transaction are initially measured at fair value adjusted for financing fees, transaction costs that are directly attributable to its origination, acquisition, issuance or assumption. In subsequent years investments in equity instruments are measured at cost less any reduction for impairment with all other financial assets and liabilities being measured at amortized cost. Management reviews its financial instruments annually to determine if there has been a significant adverse change during the period in the expected timing or amount of future cash flows from the financial asset or group of assets. In the event that a significant adverse change has occurred management reduces the carrying value of the asset or group of assets. 3. Capital Assets Hope s Home operates out of the building located at 350 College Avenue, Regina an rents classroom space from the Regina Christian School. The building is the sole location of daycare and daytime respite services provided. Renovations to the facility have been completed to accommodate a larger number of children. Capital assets consists of the following balances: 2012 Accumulated Amortization Cost Building 599,200 2011 119,840 Net Book Value 479,360 Cost Accumulated Amortization 599,200 92,277 Net Book Value 506,923 Betterments 20 59,315 6,904 52,411 50,898 3,938 46,960 Betterments 5 13,347 3,337 10,010 12,373 1,668 10,705 Vehicle 67,372 26,949 40,423 67,372 10,106 57,266 Equipment 19,195 4,646 14,549 4,035 807 3,228 Depreciable Assets 758,429 161,676 596,753 733,878 108,796 625,082 Land 149,800 149,800 149,800 908,229 161,676 746,553 733,878 149,800 108,796 774,882-6-
HOPE S HOME INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 3. Capital Assets (continued) Amortization is calculated using the straight line method as follows: Building 20 Years Betterments 20 20 Years Betterments 5 5 Years Vehicle 5 Years Equipment 5 Years Vehicle 4. 5 Years Mortgage Payable Loans payable consist of the following balances: 2012 Affinity Credit Union 5.5% (2011-7.54%) Mortgage payable in monthly principal and interest payments of 3,500 effective January 12th, 2012 secured by a first registered mortgage against 350 College Avenue, Regina, Saskatchewan Less Amounts Due in the Current Year 495,994 2011 15,100 480,894 506,168 10,224 495,944 In accordance with the terms of the mortgage, Hope s Home is required to make the following principal payment over the next five years: 2013 15,100 2014 15,952 2015 16,852 2016 17,760 2017 18,630-7-
HOPE S HOME INCORPORATED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 5. Financial Instruments Hope s Home s financial instruments consist of accounts receivable, loan receivable, accounts payable and accrued liabilities and loans payable. The fair value of accounts receivable, accounts payable and accrued liabilities approximate their carrying value given the short term nature of the amounts. 6. Change in Accounting Policy and Comparative Figures Capital Assets During the year Hope s Home amended it s accounting policy with respect to capital assets. In the past the majority of operating assets were considered an expense in the year of acquisition. Hope s Home changed it s policy and now capitalizes capital assets with a cost in excess of 1,000 and amortizes that cost to operating income over the related period as described in Note 4 to these financial statements. Hope s Home has applied this change in accounting policy retroactively resulting in the following restatement adjustments to the comparative financial statements. Adjusted Balance Item Description Capital Assets Unrestricted Net Assets 774,882 Previously Reported 713,017 Net Change 61,865 396,244 334,379 61,865 Amortization Expense 48,454 43,434 5,020 Building Repairs and Maintenance Expense 16,719 57,125 (40,406) 1,541,231 1,576,614 (35,383) (75,609) (110,993) 35,384 Total Expenses Increase (Decrease) in Net Assets As a result of the above change in accounting policy and changes in reporting requirements certain of the prior period figures have been reclassified to conform to the current period presentation. Day Care Fees Receivable During the year Hope s Home changed it s accounting policy with respect to Day Care Fees Receivable. Accounts receivable no reflects an accrual of unpaid day care fees which, in the past, were recorded as received rather than when invoiced. This change in accounting policy has resulted in an increase in accounts receivable of 20,537 with a corresponding increase in day care fee revenue, excess of revenue over expenses and net assets. The change has been applied prospectively with no adjustment of the prior period information. -8-