The Kitchener-Waterloo YMCA Financial Statements December 31,
March 26, 2018 Independent Auditor s Report To the Members of The Kitchener-Waterloo YMCA We have audited the accompanying financial statements of The Kitchener-Waterloo YMCA, which comprise the statement of financial position as at December 31, and the statements of operations, changes in net assets and cash flows for the year then ended, and the related notes, which comprise 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 audits. We conducted our audits 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 in our audits is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP 95 King Street South, Suite 201, Waterloo, Ontario, Canada N2J 5A2 T: +1 519 570 5700, F: +1 519 570 5730 PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of The Kitchener-Waterloo YMCA as at December 31, 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. Chartered Professional Accountants, Licensed Public Accountants
Statement of Financial Position As at December 31, Assets Current assets Cash and cash equivalents 4,338,793 3,475,520 Accounts receivable 579,712 86,957 Receivable from K-W YMCA Endowment Foundation (note 11) 55,087 77,756 Inventory 39,189 28,281 Prepaid expenses 375,912 547,275 5,388,693 4,215,789 Capital assets (note 3) 6,665,807 5,959,239 Prepaid co-occupancy costs (note 4) 6,841,615 7,216,118 Liabilities 18,896,115 17,391,146 Current liabilities Accounts payable and accrued liabilities (note 6) 1,511,430 1,540,384 Deferred revenue (note 7) 1,805,726 700,134 3,317,156 2,240,518 Deferred capital contributions (note 8) 6,672,683 6,884,035 9,989,839 9,124,553 Net assets Internally restricted for capital assets 3,775,965 3,054,213 Unrestricted 5,130,311 5,212,380 8,906,276 8,266,593 Commitments (note 12) 18,896,115 17,391,146 Approved by the Board of Directors Director Director The accompanying notes are an integral part of these financial statements.
Statement of Operations For the year ended December 31, Revenues Program activities 9,570,494 9,053,082 Memberships 4,695,874 4,584,541 Government grants and programs 12,233,034 11,299,725 Donations, rebates and grants 1,844,392 1,740,617 Other income including rentals and concessions 351,950 354,011 Amortization of deferred prepaid co-occupancy contributions (note 8) 200,668 200,668 Amortization of deferred capital contributions (note 8) 259,402 255,028 29,155,814 27,487,672 Expenditures Salaries, wages and benefits 16,276,475 14,909,768 Program costs 7,175,012 6,715,455 Facilities and equipment 2,876,171 2,818,099 Support costs 1,048,024 1,029,315 Staff and volunteer development 200,440 202,757 Amortization of capital assets 564,306 639,253 Amortization of prepaid co-occupancy costs 375,703 375,642 28,516,131 26,690,289 Excess of revenues over expenditures 639,683 797,383 The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets For the year ended December 31, Internally restricted for capital assets Unrestricted Balance - Beginning of year 3,054,213 5,212,380 8,266,593 7,469,210 Excess of revenues over expenditures for the year - 639,683 639,683 797,383 Net asset transfer 721,752 (721,752) - - Balance - End of year 3,775,965 5,130,311 8,906,276 8,266,593 The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows For the year ended December 31, Cash provided by (used in) Operating activities Excess revenues over expenditures 639,683 797,383 Items not involving cash Amortization of deferred capital contributions (259,402) (255,028) Amortization of deferred prepaid co-occupancy contributions (200,668) (200,668) Amortization of capital assets 564,306 639,253 Amortization of prepaid co-occupancy costs 375,703 375,642 Change in non-cash operating working capital Accounts receivable (492,755) (2,640) Receivable from K-W YMCA Endowment Foundation 22,669 (47,052) Inventory (10,908) (11,350) Prepaid expenses 171,363 (277,628) Accounts payable and accrued liabilities (28,954) 220,480 Deferred revenue 1,105,592 (338,709) 1,886,629 899,683 Investing activities Purchase of capital assets (1,270,874) (532,368) Spending of prepaid co-occupancy costs (1,200) (124,999) (1,272,074) (657,367) Financing activities Capital contributions received during the year 248,718 80,788 248,718 80,788 Increase in cash and cash equivalents 863,273 323,104 Cash and cash equivalents - Beginning of year 3,475,520 3,152,416 Cash and cash equivalents - End of year 4,338,793 3,475,520 The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements December 31, 1 Purpose of the organization The Kitchener-Waterloo YMCA ( the Association ) is dedicated to the growth of all persons in spirit, mind and body, fostering a sense of responsibility to each other and the global community, and to developing a healthy community. The Association is incorporated under the laws of Ontario as a not-for-profit organization and is a registered charity under the Income Tax Act. 2 Significant accounting policies Basis of accounting The Association prepares its financial statements in accordance with Canadian accounting standards for notfor-profit organizations ( ASNPO ). Revenue recognition Revenue is recognized following the deferral method of accounting for contributions. Unrecognized amounts have been reflected as deferred revenue in the balance sheet. Restricted grants and donations are deferred and recognized as revenue in the year in which the related expenses are incurred. Unrestricted grants are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Unrestricted donations are recognized as revenue when received. Contributions of capital assets, including government grants, are included in deferred capital contributions and are amortized to revenues at the same rate and on the same basis as amortization of capital assets. Contributions of prepaid co-occupancy costs are included in deferred capital contributions and are amortized to revenues at the same rate and on the same basis as amortization of prepaid co-occupancy costs. Program activities and membership revenue is recognized as services are rendered. Internally restricted funds The Association has established an internally restricted fund to provide a source of funding for the purchase of capital assets. The fund has been designated as internally restricted by the Board of Directors and is held separate from the operating funds of the Association. Cash and cash equivalents The Association considers deposits in banks, certificates of deposit and short-term investments with original maturities of 90 days or less as cash and cash equivalents. (1)
Notes to Financial Statements December 31, Inventory Inventory is stated at the lower of cost and net realizable value. Cost is generally determined on the first-in, first-out basis. Capital assets Purchased capital assets are recorded at cost. Contributed capital assets are recorded at fair value, when fair value can be reasonably estimated, at the date of contribution. Capital projects in progress are not amortized until the asset is available for use. Amortization is provided on a straight-line basis over the assets estimated useful lives as follows: Buildings Land improvements Furniture and equipment 25 years 5 or 10 years 5 or 10 years Impairment of long-lived assets The Association reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of capital assets is measured by comparison of their carrying amount to the undiscounted projected future net cash flows the long- lived assets are expected to generate. If the carrying value, exceeds the estimated amount recoverable, a write-down equal to the excess of the carrying value over the assets fair value is charged to the statement of operations. Contributed goods and services The value of contributed services to the Association is not reflected in these financial statements due to the difficulty of determining the fair value. The value of the goods contributed to the Association are reflected as donations in these financial statements at the values attributed for income tax purposes of nil ( - 980). Prepaid co-occupancy costs Prepaid co-occupancy costs are recognized over the terms of the agreements. Use of estimates The preparation of financial statements in accordance 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 at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from management s best estimates as additional information becomes available in the future. Significant estimates are required in the valuation of capital assets. (2)
Notes to Financial Statements December 31, Financial instruments The Association s financial instruments consist of cash and cash equivalents, accounts receivable, receivable from K-W YMCA Endowment Foundation, and accounts payable. The Association records its financial instruments initially at fair value and subsequently they are recorded at amortized cost. The aggregate amount of financial instruments recorded at amortized cost is an asset of 3,462,162 ( - an asset of 2,099,849). Financial assets are tested for impairment at the end of each reporting period where there are indications that the assets may be impaired. Any excess of the carrying amount of the financial assets over the recoverable amount is recorded as an impairment charge. A previously recognized impairment charge may be reversed in future periods. 3 Capital assets Cost Accumulated amortization Net Land 352,266-352,266 Buildings 14,274,000 10,010,906 4,263,094 Land improvements 206,622 164,670 41,952 Furniture and equipment 5,097,133 3,499,209 1,597,924 Project in progress 410,571-410,571 20,340,592 13,674,785 6,665,807 Cost Accumulated amortization Net Land 352,266-352,266 Buildings 14,008,486 9,808,302 4,200,184 Land improvements 206,368 143,056 63,312 Furniture and equipment 4,583,762 3,240,285 1,343,477 19,150,882 13,191,643 5,959,239 (3)
Notes to Financial Statements December 31, 4 Prepaid co-occupancy costs The Association has entered into three long term co-occupancy agreements. Each agreement requires contribution payments to be made by the Association to fund facility construction costs of the co-occupancy partner which are reimbursable upon cancellation of the agreements subject to certain restrictions. The cooccupancy partner is the sole owner of the facility in each arrangement. These prepaid co-occupancy costs are being amortized upon occupancy over the term of each agreement. The co-occupancy partner, the terms of the original co-occupancy agreement and the unamortized value of each of the three agreements are as follows: 5 Bank loan Waterloo Region District School Board (2003-2020) 67,301 77,397 Waterloo Region District School Board (2009-2028) 106,667 116,667 City of Waterloo (2011-2037) 6,667,647 7,022,054 6,841,615 7,216,118 The Association has an operating line of credit available to a maximum of 500,000 which bears interest at bank prime. As of December 31, no amounts ( - nil) had been drawn against this operating line. The operating line is secured by a general security agreement and continuing collateral mortgage providing a first charge over specified properties of the Association. As of December 31,, the Association is in compliance with its covenants. 6 Government remittances At December 31, the Association has outstanding government remittances payable including amounts for sales tax, payroll taxes, and health taxes of nil ( - nil). None of these remittances are in arrears. 7 Deferred revenue The deferred revenue balance consists of unrecognized grant revenue, annual membership fees paid in advance and unrecognized revenue relating to programs for which services have yet to be rendered. (4)
Notes to Financial Statements December 31, 8 Deferred capital contributions Deferred capital contributions represent externally restricted contributions. The changes in the deferred capital contributions balance for the year are as follows: Beginning balance 6,884,035 7,258,943 Capital contributions 248,718 80,788 Amortization of deferred capital contributions (259,402) (255,028) Amortization of deferred prepaid co-occupancy contributions (200,668) (200,668) 6,672,683 6,884,035 In, 3,782,841 ( - 3,979,009) of deferred capital contributions received are restricted for prepaid cooccupancy costs for the Stork Family YMCA in Waterloo. In, 4,500 ( - 15,813) of capital contributions were related to prepaid co-occupancy costs for the Stork Family YMCA in Waterloo. 9 Net change in fund balances invested in capital assets The net change in fund balances invested in capital assets includes the following: Purchase of capital assets 1,270,874 532,368 Capital contributions received during the year (244,218) (64,975) Amortization of capital assets (564,306) (639,253) Amortization of deferred capital contributions 259,402 255,028 Increase in fund balance 721,752 83,168 10 Collaboration agreement The Association and the YMCA of Cambridge, Ontario have entered into a collaboration agreement to share resources and pursue common goals. The YMCA of Cambridge s share of operational costs owed to the Association was 471,432 ( - 430,000). 11 Economic interest The Association has an economic interest in the K-W YMCA Endowment Foundation (the Foundation), a charitable foundation. The Association annually requests a contribution from the Foundation, however, the assets of the Foundation are not available to satisfy the liabilities of the Association. In, the Foundation approved a grant of 55,447 ( - 40,410) to the Association. This amount is expected to be received in 2018. (5)
Notes to Financial Statements December 31, 12 Commitments The Association is committed under operating leases or facility agreements to rent premises and equipment as follows: 2018 780,569 2019 686,121 2020 583,870 2021 268,633 2022 and thereafter 512,384 13 Financial instruments 2,831,577 Credit risk Financial instruments which are potentially exposed to credit risk include cash and cash equivalents, and accounts receivable. Management considers its exposure to credit risk attributable to cash and cash equivalents to be trivial as the organization holds cash deposits at one major Canadian chartered bank. Accounts receivable are not concentrated and therefore bear only low to moderate risk; the carrying amount of accounts receivable represents the maximum credit risk exposure. Interest rate risk The Association is exposed to interest rate risk arising from fluctuations in interest rates depending on prevailing rates at renewal of investments. To manage interest rate exposure, the Association invests in various income vehicles backed by a chartered bank. Liquidity risk Liquidity risk is the risk that the organization will not be able to meet its financial obligations as they come due. The organization has taken steps to ensure that it has sufficient working capital available to meet its obligations. 14 Pension plan The Association has made contributions to a defined contribution pension plan on behalf of its employees in the amount of 454,019 (- 424,067). (6)