Financial Statements of THOMPSON RIVERS UNIVERSITY STUDENTS' UNION
Auditors' Report Exhibit A Statement of Financial Position 1 Exhibit B Statement of Operations 2 Exhibit C Statement of Changes in Fund Balances 3 Exhibit D Statement of Cash Flows 4 Notes to Financial Statements 5
KPMG LLP Telephone (250) 372-5581 Chartered Accountants Fax (250) 828-2928 200-206 Seymour Street Internet www.kpmg.ca Kamloops BC V2C 6P5 Canada INDEPENDENT AUDITORS' REPORT To the Members of Thompson Rivers University Students' Union: We have audited the accompanying financial statements of Thompson Rivers University Students' Union which are comprised of the statement of financial position as at July 31, 2012, the statements of operations, changes in fund balances, 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 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. 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. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.
Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Thompson Rivers University Students' Union as at July 31, 2012, and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Kamloops, Canada November 20, 2012
Exhibit A - Statement of Financial Position July 31, 2012, with comparative figures for 2011 Assets 2012 2011 Current assets: Cash $ 1,607,437 $ 1,284,442 Guaranteed investment certificates - 16,648 Accounts receivable 241,876 310,954 Inventories - 23,114 Prepaid expenses and deposits 26,525 62,810 1,875,838 1,697,968 Capital assets (note 2) 3,045,468 3,200,387 Liabilities and Fund Balances $ 4,921,306 $ 4,898,355 Current liabilities: Accounts payable and accrued liabilities $ 263,411 $ 285,027 Current portion of obligations under capital lease (note 3) 65,226 61,742 Current portion of long-term debt (note 4) 80,000 80,000 408,637 426,769 Obligations under capital lease (note 3) 780,168 845,394 Long-term debt (note 4) 880,000 960,000 Fund balances: Internally restricted funds - Building 1,599,022 1,573,060 Internally restricted funds - Health and Dental 738,848 695,000 Unrestricted funds - Operating 514,631 398,132 2,852,501 2,666,192 $ 4,921,306 $ 4,898,355 See accompanying notes to financial statements. On behalf of the Council: Director Director 1
Exhibit B - Statement of Operations, with comparative figures for 2011 Budget 2012 2011 Revenue: Operating fund Membership Dues $ 987,500 $ 987,050 $ 990,489 Student Services 225,500 240,455 229,421 UPASS 780,000 816,017 781,458 Grants and other income 20,700 23,566 20,154 2,013,700 2,067,088 2,021,522 Other Building fund 260,000 263,172 264,088 Health and Dental fund 585,000 627,021 582,934 2,858,700 2,957,281 2,868,544 Expenses: Operating fund Equity collectives 35,000 9,325 6,266 Campaigns and government relations 44,800 41,936 20,805 Student caucus and institutional governance 5,275 - - Common Grounds 114,988 156,778 116,703 Employment centre 108,000 108,000 108,000 UPASS 782,000 814,381 781,458 Other 20,700 3,844 - Clubs and faculty administration & grants 38,000 30,086 31,580 Endowment 15,000 15,000 - Entertainment 96,841 100,930 93,508 Communications and membership development 42,810 34,799 47,105 Office and administration 84,396 102,874 92,407 Governance and council 99,750 81,848 81,700 Wages and benefits 266,250 287,954 265,429 Amortization 72,000 62,834 74,288 1,825,810 1,850,589 1,719,249 Other Amortization 177,000 175,080 175,815 Interest on capital lease 64,000 51,177 54,475 Interest on long-term debt 55,000 57,749 62,352 Student Union building 79,400 103,204 44,306 375,400 387,210 336,948 Health and Dental fund 555,275 533,173 560,646 2,756,485 2,770,972 2,616,843 Excess of revenue over expenses $ 102,215 $ 186,309 $ 251,701 See accompanying notes to financial statements. 2
Exhibit C - Statement of Changes in Fund Balances, with comparative figures for 2011 2012 2011 Operating Building Health and Fund Fund Dental Fund Total Total Fund balances, beginning of year $ 398,132 $ 1,573,060 $ 695,000 $ 2,666,192 $ 2,414,491 Excess (deficiency) of revenue over expenses 216,499 (124,038) 93,848 186,309 251,701 Transfers from Operating and Health and Dental Funds to Building Fund per Council resolution (100,000) 150,000 (50,000) - - Fund balances, end of year $ 514,631 $ 1,599,022 $ 738,848 $ 2,852,501 $ 2,666,192 See accompanying notes to financial statements. 3
Exhibit D - Statement of Cash Flows, with comparative figures for 2011 Cash provided by (used in): 2012 2011 Operations: Excess of revenue over expenses $ 186,309 $ 251,701 Item not involving cash: Amortization 237,914 250,103 424,223 501,804 Change in non-cash operating working capital: Accounts receivable 69,078 (24,308) Inventories 23,114 (6,500) Prepaid expenses and deposits 36,285 (32,961) Accounts payable and accrued liabilities (21,616) 178,545 531,084 616,580 Financing: Repayment of obligations under capital lease (61,742) (58,445) Repayment of long-term debt (80,000) (80,000) (141,742) (138,445) Investments: Redemption (purchase) of guaranteed investment certificates 16,648 (174) Purchase of capital assets (82,995) (7,647) (66,347) (7,821) Increase in cash 322,995 470,314 Cash position, beginning of year 1,284,442 814,128 Cash position, end of year $ 1,607,437 $ 1,284,442 Supplemental cash flow information: Interest paid $ 51,177 $ 54,475 See accompanying notes to financial statements. 4
Notes to Financial Statements Thompson Rivers University Students' Union (the "Union") is incorporated under the Society Act of British Columbia and its principal activity is to provide services to the students of the Thompson Rivers University ("TRU"). 1. Significant accounting policies: These financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles for not-for-profit organizations and include the following significant accounting policies: (a) Fund accounting: The Union follows the fund accounting method generally in use for not-for-profit organizations. A fund is determined for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The financial position of the Union is shown on the statement of financial position and includes the assets, liabilities and fund balances of all funds. The Union maintains the following funds: (i) Operating Fund: The Operating Fund reflects the activities associated with the Union's day-to-day operations, including its short and long-term capital requirements. (ii) Building Fund: The Building Fund reflects the activities associated with operating and maintaining the building addition in use by the Union. This fund includes the portion of student fees which are restricted for these purposes, as well as related capital lease payments and interest. (iii) Health and Dental Fund: The Health and Dental Fund reflects the net fees collected from students which are restricted for the provision of health and dental insurance. (b) Revenue recognition: The Union follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Student fees and health and dental premiums are recognized as revenue according to the academic terms to which they relate. Fees collected for the University Bus Pass Program (U-Pass) are not recognized as revenue of the Union as the Union cannot cancel the U- Pass contract except by referendum of the membership. Investment earnings are recognized as revenue when earned. Grants and other income and revenue from Common Grounds Coffee shop are recognized as the goods and services are provided. 5
Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (c) Capital assets: Capital assets are recorded at cost. Contributed capital assets are recorded at fair value at the date of contribution. Assets acquired under capital leases are amortized over the estimated life of the assets or over the lease term, as appropriate. Repairs and maintenance costs are charged to expense. Betterments which extend the estimated life of an asset are capitalized. When a capital asset no longer contributes to the organization's ability to provide services, its carrying amount is written down to its residual value. Capital assets are amortized on a declining balance basis at the following annual rates: Asset Rate Furniture and equipment 20% Common Grounds furniture and equipment 20% Revitalization project 15% Leasehold improvements under capital lease 4% (d) Use of estimates: The preparation of financial statements in conformity with Canadian generally accepted accounting principles 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 items subject to such estimates and assumptions include the estimated useful lives and recoverable amount of capital assets and the recoverable amount of accounts receivable. Actual results could differ from those estimates. (e) Financial instruments: Financial instruments consist of cash, guaranteed investment certificates, accounts receivable, accounts payable and accrued liabilities, and long-term debt. Cash and guaranteed investment certificates are designated as held for trading and recorded at fair value with any changes in fair value recognized as income in the statement of operations. Accounts receivable is designated as loans and receivables; accounts payable and accrued liabilities and long-term debt are classified as other financial liabilities, all of which are carried at amortized cost. The Union has elected to continue to apply the financial instrument disclosure and presentation standards in accordance with Section 3861, Financial Instruments - Disclosure and Presentation in its July 31, 2012 financial statements. 6
Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (f) Accounting pronouncements issued but not yet effective: In December 2010, the Accounting Standards Board ("AcSB") issued new accounting standards for Not-for-Profit Organizations such as the Union. The new accounting framework will incorporate current CICA Handbook sections 4400 to 4470 into the AcSB new accounting handbook, which prescribes accounting standards for Canadian private and publicly accountable entities. The Union will be required to adopt these new standards beginning in its fiscal year commencing August 1, 2012 and has yet to determine the impact of the changes on its financial statements. 2. Capital assets: 2012 2011 Accumulated Net book Net book Cost amortization value value Operating fund: Furniture and equipment $ 541,142 $ 314,917 $ 226,225 $ 253,092 Common Grounds furniture and equipment 77,211 38,907 38,305 47,881 618,353 353,824 264,530 300,973 Building fund: Independent Centre equipment 29,507 25,943 3,564 4,455 Leasehold improvement financed under capital lease 2,492,738 789,035 1,703,703 1,734,807 Revitalization project 1,382,058 308,387 1,073,671 1,160,152 3,904,303 1,123,365 2,780,938 2,899,414 $ 4,522,656 $ 1,477,189 $ 3,045,468 $ 3,200,387 7
Notes to Financial Statements (continued) 3. Obligations under capital lease: The Union has entered into a long-term lease agreement with TRU for the addition to the Campus Activity Centre known as the Independent Centre. The lease expires in 2026 and is accounted for as a capital lease in the Building Fund. The following is a schedule of the future minimum lease payments of the capital lease whereby the legal obligation expires in 2021: 2012 2013 $ 112,920 2014 112,920 2015 112,920 2016 112,920 2017 112,920 Thereafter 564,598 Total minimum lease payments 1,129,198 Less: amount representing interest at 5.501% 283,804 Present value of net minimum capital lease payments 845,394 Current portion of obligations under capital lease 65,226 $ 780,168 Interest of $51,177 (2011 - $54,475) relating to capital lease obligations has been included in interest expense in the Building Fund. 4. Long-term debt: 2012 2011 TRU, loan, bearing interest at 5.75% per annum, (repricing date November 15, 2013), repayable in annual instalments of $80,000 plus interest, secured by all student union fees payable by the students of TRU that currently are or may at any time be due or owing to the Union, maturing April 26, 2026 $ 960,000 $ 1,040,000 Current portion of long-term debt 80,000 80,000 $ 880,000 $ 960,000 8
Notes to Financial Statements (continued) 4. Long-term debt (continued): Scheduled principal repayments for each of the next five years and thereafter are as follows: 2013 $ 80,000 2014 80,000 2015 80,000 2016 80,000 2017 80,000 Thereafter 560,000 $ 960,000 Interest of $57,749 (2011 - $62,352) relating to loan obligations has been included in interest expense in the Building Fund. 5. Non-discretionary allocations: During the year, the Union collected fees on behalf of the following autonomous organizations: 2012 2011 Canadian Federation of Students $ 118,755 $ 117,366 Cariboo Child Care Society 21,718 21,859 Cariboo Student Newspaper Society 84,138 84,756 Kamloops Campus/Community Radio Station 96,096 96,599 $ 320,707 $ 320,580 As these fees are collected on behalf of the other organizations, they are not included in the statement of operations. 9
Notes to Financial Statements (continued) 6. Financial instruments: (a) Fair value: Assets and liabilities designated as held for trading, including cash and guaranteed investment certificates, are measured in the statement of financial position at fair value. The carrying value of accounts receivable and accounts payable and accrued liabilities approximates their fair value due to the relatively short term to maturity of these instruments. The carrying value of long-term debt approximates its fair value as the terms and conditions of the borrowing arrangement are comparable to current market terms and conditions for similar items. (b) Interest rate risk: The Union is not exposed to interest rate risk in respect of its obligations under capital lease, which bear interest at fixed rates as disclosed in note 3. The Union's long-term debt, which bears interest at fixed rates as described in note 4, carries some level of interest rate risk as the interest rate is subject to adjustment at certain future dates. (c) Credit and currency risk: It is management's opinion that the Union is not exposed to significant credit risk or currency risk associated with its financial instruments. 7. Capital disclosures: The Union defines its capital to be its fund balances; operating, building and health and dental. The internally restricted fund balances consist of amounts for future capital lease commitments (note 3) and future activities of the funds. The Union s objective when managing capital is to safeguard its ability to continue as a going concern so it can continue to provide services to its members. Annual budgets are developed and monitored to ensure the Union s capital is maintained at an appropriate level. 8. Economic dependence: Substantially all of the Union's revenue (93%) (2011-93%) is earned from mandatory student fees and health and dental premiums which are collected from students by TRU. Any change which results in these fees becoming optional may result in a reduction of fees collected. 9. Comparative figures: Certain 2011 comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year. 10