1 Financial Statements of ASSOCIATION OF FUNDRAISING PROFESSIONALS
2 INDEPENDENT AUDITORS' REPORT To the Members of ASSOCIATION OF FUNDRAISING PROFESSIONALS We have audited the accompanying financial statements of Association of Fundraising Professionals - Greater Toronto Chapter, which comprise the balance sheet as at and the statement of operations, 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 in our audit 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 the Association of Fundraising Professionals - Greater Toronto Chapter as at, 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. TORONTO, Ontario April 21, 2016 Licensed Public Accountants
3 Balance Sheet As at 2014 Assets Current Cash $ 85,322 $ 90,232 Investments (note 3) 313, ,488 Accounts receivable 115,999 57,822 Due from AFP International 10,171 14,230 Prepaid expenses 48,800 15, , ,694 Capital assets (note 4) 12,287 23,188 Liabilities and Net Assets $ 586,003 $ 511,882 Current Accounts payable and accrued liabilities (note 5) $ 31,558 $ 47,847 Sales tax payable 32,150 29,493 Deferred fee revenue (note 6) 84,750 35, , ,620 Net assets Unrestricted 137,545 99,262 Internally restricted (note 7) 300, ,000 Commitments (note 8) 437, ,262 $ 586,003 $ 511,882 See accompanying notes to financial statements. On behalf of the Board: Director Director 2
4 Statement of Operations Period ended December 31, (12 months) (5 months) Revenues Congress $ 784,150 $ 683,050 Member services 247, ,875 Fundraising day 170,800 - AFP International (note 9) 110,000 41,667 Member fees (note 6) 88,535 51,928 Awards luncheon 71,475 57,450 Education 24,671 8,345 Ethics and professional advancement 21,785 16,180 Investment income 2,936 1,715 Miscellaneous 1,958 2,605 National job posting program ,524, ,780 Expenses Congress 665, ,256 Salaries, benefits and casual labour 243, ,423 Fundraising day 140,291 - General and administrative 111,961 55,057 Awards luncheon 107,409 97,676 AFP International (note 9) 104,868 27,726 External / board relations 27,823 8,759 Communications 20,323 27,125 Member services 15,909 14,643 Professional / consulting services 15,715 8,598 Ethics and professional advancement 15,387 14,494 Education 14,654 7,061 D3 event 3,250-1,486, ,818 Excess (deficiency) of revenues over expenses for the period $ 38,283 $ (25,038) See accompanying notes to financial statements. 3
5 Statement of Changes in Net Assets Period ended December 31, (12 months) (5 months) Internally Unrestricted Restricted Total Total (note 7) Balance, beginning of period $ 99,262 $ 300,000 $ 399,262 $ 424,300 Excess (deficiency) of revenue over expenses for the period 38,283-38,283 (25,038) Balance, end of period $ 137,545 $ 300,000 $ 437,545 $ 399,262 See accompanying notes to financial statements. 4
6 Statement of Cash Flows Period ended December 31, (12 months) (5 months) Cash provided by (used for): Operating activities: Cash received from corporate activities $ 1,514,196 $ 898,963 Cash paid for corporate activities (1,523,499) (942,588) Miscellaneous income 1,958 2,605 Investment Income 2,936 1,715 National job posting program Sales taxes paid 2,657 10,210 Net cash used by operating activities (789) (28,130) Investing activities: Purchase of capital assets (1,185) - Redemption (purchase) of investments (2,936) 48,511 (4,121) 48,511 Increase (decrease) in cash (4,910) 20,381 Cash, beginning of period 90,232 69,851 Cash, end of period $ 85,322 $ 90,232 See accompanying notes to financial statements. 5
7 Notes to Financial Statements 1 Organization The Association of Fundraising Professionals serves fundraising professionals through 243 chapters throughout the world. The Association of Fundraising Professionals ("AFP") Greater Toronto Chapter, an organization independent of the international and national organizations, was incorporated under the laws of Ontario on May 11, It aims to foster the development and growth of fundraising professionals, to preserve and enhance philanthropy and volunteerism and to promote high ethical standards in the fundraising profession in the Greater Toronto Area. AFP is a non-profit organization under the Income Tax Act (Canada) and, as such, is exempt from income taxes provided certain conditions are met. 2 Summary of significant accounting policies These financial statements have been prepared in accordance with Canadian accounting standards for not-forprofit organizations and include the following significant accounting policies. (a) Basis of accounting AFP follows the deferral method of accounting for contributions. 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. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. (b) Cash Cash includes cash deposits in the bank. (c) Capital assets Capital assets are stated at cost less accumulated amortization. The cost of a capital asset comprises its purchase price and any directly attributable cost of preparing the asset for its intended use. A capital asset is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized in the statement of operations when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the capital asset exceeds its fair value. An impairment loss is not reversed if the fair value of the capital asset subsequently increases. As at, no such impairment exists. Amortization of capital assets is provided for on a straight line basis over the estimated useful lives as follows: Furniture and equipment Computer equipment and software Website Leasehold improvements 5 years 3 years 3 years term of lease
8 Notes to Financial Statements 2 Summary of accounting policies (continued) (d) Revenue recognition Membership fee revenue is deferred and amortized into revenue over the membership term. Event revenue is recognized on completion of the event. Amounts received in advance of the staging of the event is recorded as deferred revenues. Investment income is recognized on an accrual basis. (e) Foreign currency translation Monetary assets and liabilities denominated in United States (US) dollars are translated at the year-end exchange rate. Transactions denominated in US dollars are translated into Canadian dollars at the exchange rate in effect at the date of deposit. Exchange gains or losses are included in net income for the year. (f) Financial instruments (i) Measurement AFP initially measures its financial assets and financial liabilities at fair value. AFP subsequently measures all its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include cash, investments, accounts receivable and due from AFP International. Financial liabilities measured at amortized cost include accounts payable and accrued liabilities. (ii) Impairment At the end of each reporting period, AFP assesses whether there are any indications that a financial asset measured at amortized cost may be impaired. (g) Contributed services and materials The value of goods and services is recorded as revenue and an expense in the financial statements when the fair value can be reasonably estimated and when the goods and services would otherwise be purchased if not donated. Volunteers provide invaluable donated services to AFP. Since volunteer time is not purchased, contributed services are not recognized in the financial statements. (h) Use of estimates The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations requires management to make estimates 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.
9 Notes to Financial Statements 3 Investments Investments are comprised of guaranteed investment certificates ("GICs"). As at 2014 Cashable GIC maturing May 26, 2016 ( May 27, 2015) yielding interest at 0.70% ( %) $ 113,620 $ 112,719 Non-redeemable GIC maturing June 13, 2016 ( May 27, 2015) yielding interest at 1.30% ( %) 197, ,648 Accrued interest 1,906 2,121 Total investments $ 313,424 $ 310,488 4 Capital assets As at 2014 Accumulated Accumulated Cost Amortization Cost Amortization Furniture and equipment $ 1,694 $ (1,694) $ 1,694 $ (1,694) Computer equipment and software 53,384 (41,097) 52,199 (29,504) Website 12,377 (12,377) 12,377 (12,377) Leasehold improvements 7,395 (7,395) 7,395 (6,902) $ 74,850 $ (62,563) $ 73,665 $ (50,477) Net book value $ 12,287 $ 23,188 5 Accounts payable and accrued liabilities As at 2014 Trade payables and accrued liabilities $ 31,558 $ 41,414 Payroll withholding taxes payable - 6,433 $ 31,558 $ 47,847
10 Notes to Financial Statements 6 Deferred fee revenue Deferred fee revenue is comprised of the unearned portion of event and membership fees received in advance. Membership Luncheon Other Balance, beginning of period $ 35,280 $ - $ - $ 35,280 $ 61,162 Add: amounts received during the period 93,645 44, ,005 26,046 Deduct: recognized as revenue (88,535) - - (88,535) (51,928) Balance, end of period $ 40,390 $ 44,220 $ 140 $ 84,750 $ 35,280 7 Net assets - internally restricted The Board of Directors has internally restricted $300,000 to provide for an operating reserve. Resources in this fund are not available for unrestricted purposes without approval of the Board of Directors. 8 Commitments AFP has entered into a lease for office space which expires June 30, The minimum payments under the lease agreement, excluding applicable taxes and additional rent for operating expenses, for the next 5 years are: 9 AFP International 2016 $15, , , , ,228 AFP receives funding from AFP International as specified in the Memorandum of Understanding ("MOU") between AFP and AFP International. The purpose of the MOU is to establish the terms and conditions of integrating the management and administration of the AFP Foundation for Philanthropy - Canada ("AFP Foundation") and the AFP Canada Membership Services, into the daily administrative operations of AFP. Pursuant to the MOU, AFP International has agreed to provide funding and service fees to AFP in the amount of $110,000 ( $110,000) per year to offset the costs associated with assuming these additional administrative functions. The amount of funding provided by AFP International will be reviewed annually. Any additional costs related to the administration of the AFP Foundation or the AFP Canada Membership Services will be approved by AFP International and reimbursed to AFP. Funding received for the year ended totals $110,000 (5 months ending December 31, $41,667).
11 Notes to Financial Statements 10 Financial instruments AFP is exposed to various risks through its financial instruments. The following analysis provides a measure of AFP's risk exposure and concentrations. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. AFP is exposed to credit risk through its cash, investments, accounts receivable and due from AFP International. Accounts receivable are unsecured. AFP historically has virtually no bad debts. AFP's bank accounts and investments are held at one financial institution. Funds on deposit can exceed the maximum amount insured and hence there is a concentration of credit risk. Credit risk related to investments is minimized by ensuring that these assets are invested with credit-worthy parties. Liquidity risk Liquidity risk is the risk that AFP will not be able to meet a demand for cash or fund its obligations as they come due. AFP meets its liquidity requirements by preparing and monitoring detailed forecasts of cash flows from operations and anticipating investing and financing activities. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk, interest rate risk and other price risk. Currency risk Foreign currency risk reflects the risk that AFP's earnings will vary due to the fluctuations in the United States (US) dollar exchange rate. AFP is exposed to currency risk through its USD denominated receivables, which as at totals $Nil ( $14,230). Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. AFP's cash includes amounts on deposit with financial institutions that earn interest at market rates. AFP manages its exposure to the interest rate risk of its cash by maximizing the interest income earned on excess funds while maintaining the liquidity necessary to conduct operations on a day-to-day basis. Fluctuations in market rates of interest on cash do not have a significant impact on AFP s results of operations. The primary objective of AFP with respect to its short term investments is to ensure the security of principal amounts invested, provide for a high degree of liquidity, and achieve a satisfactory investment return. Changes in risk During the year, AFP began receiving payment of membership fees in Canadian dollars, rather than USD, thereby reducing AFP's exposure to currency risk. There have been no additional changes in AFP's risk exposures from the prior year.