Financial statements of La Fondation de l Hôpital général de Montréal The Montreal General Hospital Foundation

Transcription

1 Financial statements of La Fondation de l Hôpital général de Montréal The Montreal General Hospital Foundation March 31, 2015

2 Independent Auditor s Report Statement of operations... 3 Statement of changes in fund balances... 4 Statement of financial position... 5 Statement of cash flows... 6 Notes to the financial statements

3 Deloitte LLP 1 Place Ville Marie Suite 3000 Montréal QC H3B 4T9 Canada Tel: Fax: Independent Auditor s Report To the Board of Directors of La Fondation de l Hôpital général de Montréal We have audited the accompanying financial statements of La Fondation de l Hôpital général de Montréal, which comprise the statement of financial position as at March 31, 2015, and the statements of operations, changes in fund balances 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.

4 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 La Fondation de l Hôpital général de Montréal as of March 31, 2015, 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. May 27, CPA auditor, CA, public accountancy permit No. A125888

5 Statement of operations Year ended March 31, 2015 Notes General Projects General Endowment Designated Endowment Total Total $ $ $ $ $ $ Revenue Donations 1,096,643 5,539,960 8,955,062 15,591,665 12,720,131 Gain on sale of investments 3,953,654 6,889,152 10,842,806 2,711,722 Interest 579,256 1,009,342 1,588,598 1,570,262 Other investment income 732,371 1,276,139 2,008,510 2,260,963 6,361,924 14,714,593 8,955,062 30,031,579 19,263,078 Expenditures Support of hospital services and research activities 475,845 9,278,390 9,754,235 12,027,628 Awards and scholarships 3,513,664 3,513,664 3,161,941 Donations attributable to trust accounts 445, , ,399 Investment management fees 1,066,111 1,066, ,437 Administrative expenses 2,025,271 2,025,271 1,499,184 3,567,227 13,237,677 16,804,904 17,914,589 Excess of revenue over expenditures before the undernoted item 2,794,697 1,476,916 8,955,062 13,226,675 1,348,489 Change in unrealized appreciation on investments 3 (2,431,208) (1,630,681) (4,061,889) 7,900,997 Excess (deficiency) of revenue over expenditures 363,489 (153,765) 8,955,062 9,164,786 9,249,486 The accompanying notes are an integral part of these financial statements. Page 3

6 Statement of changes in fund balances Year ended March 31, 2015 Notes General Projects General Endowment Designated Endowment Total Total $ $ $ $ $ $ balances, beginning of year 50,000 25,201,620 17,613,380 92,034, ,899, ,650,032 Excess (deficiency) of revenue over expenditures 363,489 (153,765) 8,955,062 9,164,786 9,249,486 Transfer of unrealized appreciation on investments between funds 2,431,208 1,630,681 (4,061,889) Interfund transfers 4 (1,756,760) 8,220,838 1,666,349 (8,130,427) balances, end of year 1,087,937 34,899,374 15,217,840 92,859, ,064, ,899,518 Externally restricted 20,738,643 30,691,977 51,430,620 56,312,447 Internally restricted 1,087,937 14,160,731 15,217,840 62,167,176 92,633,684 78,587,071 1,087,937 34,899,374 15,217,840 92,859, ,064, ,899,518 The accompanying notes are an integral part of these financial statements. Page 4

7 Statement of financial position As at March 31, 2015 Notes $ $ Assets Current assets Cash 3,092,260 2,210,580 Sales tax receivable 151, ,049 Accrued revenue 342, ,005 3,585,957 2,809,634 Investments 3 142,178, ,452, ,764, ,261,933 Liabilities Current liabilities Accounts payable and accrued liabilities 842, ,831 Due to the McGill University Health Centre 834, ,584 Due to the Research Institute of the McGill University Health Centre 22, ,000 1,699,863 1,362,415 Commitments and contingencies 6 balances Restricted for designated endowment 92,859,153 92,034,518 Restricted for general endowment 15,217,840 17,613,380 Restricted for projects 34,899,374 25,201,620 Unrestricted (General ) 1,087,937 50, ,064, ,899, ,764, ,261,933 The accompanying notes are an integral part of these financial statements. Approved by the Board, Director, Director Page 5

8 Statement of cash flows Year ended March 31, $ $ Operating activities Excess of revenue over expenditures 9,164,786 9,249,486 Adjustment for Change in unrealized appreciation on investments 4,061,889 (7,900,997) Gain on sale of investments (10,842,806) (2,711,722) 2,383,869 (1,363,233) Changes in non-cash operating working capital items Sales tax receivable 11,648 (100,040) Accrued revenue 93,709 25,945 Accounts payable and accrued liabilities 191, ,413 Amounts due to other entities 146, ,819 2,826,674 (781,096) Investing activities Acquisition of investments (108,808,723) (62,701,853) Disposition of investments 106,863,729 62,189,888 (1,944,994) (511,965) Net increase (decrease) in cash 881,680 (1,293,061) Cash, beginning of year 2,210,580 3,503,641 Cash, end of year 3,092,260 2,210,580 The accompanying notes are an integral part of these financial statements. Page 6

9 Notes to the financial statements March 31, Purpose of the Foundation (the Foundation ), as a founding partner of the McGill University Health Centre ( MUHC ), exists to foster excellence in patient care, education and research, primarily at the Montreal General Hospital. The Foundation raises funds which are applied to the priority needs of the hospital and its patients in accordance with the wishes of donors. The Foundation is incorporated under Part III of the Companies Act (Quebec). The Foundation is also recognized as a charitable institution under Section 149.1(1)(a) of the Income Tax Act (Canada). This status exempts the Foundation from income taxes. 2. Significant accounting policies The financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations ( ASNPO ) and reflect the following significant accounting policies: accounting The revenue, expenditures and capital of the Foundation are maintained in accordance with the principles of fund accounting and are classified into funds in accordance with activities or objectives specified. The Foundation follows the restricted fund method of accounting for contributions. The General accounts for the Foundation s funds available to support Foundation expenses and hospital and/or research institute projects. This fund reports unrestricted resources. The Projects reports internally and externally restricted resources that are to be used for specific projects. The General Endowment consists of the cumulative unrealized appreciation or depreciation on investments and unallocated investment income that has been reinvested. These amounts are internally restricted and are available for other purposes as decided by the Board of Directors. The Designated Endowment reports resources contributed for endowment. It also includes unrestricted resources internally designated as endowments. Investment income earned on the resources of these endowment funds is allocated to the Projects and/or to the General depending on the nature of any restrictions imposed by contributors of funds for endowment. Revenue recognition Restricted donations are recognized as revenue of the Projects when received or receivable. Unrestricted donations are recognized as revenue of the General when received or receivable. Donations for endowment are recognized as revenue in the Designated Endowment. Page 7

10 Notes to the financial statements March 31, Significant accounting policies (continued) Revenue recognition (continued) Investment income earned on Endowment resources that must be spent on projects is recognized as revenue in the Projects. Unrestricted investment income earned on Endowment resources and other investment income is recognized as revenue of the General when earned. Financial instruments Financial assets and financial liabilities are initially recognized at fair value when the Foundation becomes a party to the contractual provisions of the financial instrument. Subsequently, all financial instruments are measured at amortized cost except for the investments, which are recorded at fair value. Fair value of the investments is determined using closing prices on the recognized stock exchange on which the stock is listed or principally traded, when available, or through pricing services. Gains and losses on the sale of the investments are calculated at average cost on the trade date. Change in unrealized appreciation/depreciation on the investments represents the change in fair value of the investments between the current year and the prior year. Transaction costs related to investments are expensed as incurred. Transaction costs related to the other financial instruments are added to the carrying value of the asset or netted against the carrying value of the liability and are then recognized over the expected life of the instrument using the straight-line method. Any premium or discount related to an instrument measured at amortized cost is amortized over the expected life of the item using the straight-line method and recognized in the statement of operation as interest income or expense. With respect to financial assets measured at cost or amortized cost, the Foundation recognizes in the statement of operation an impairment loss, if any, when it determines that a significant adverse change has occurred during the period in the expected timing or amount of future cash flows. When the extent of impairment of a previously written-down asset decreases and the decrease can be related to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed in the statement of operation in the period the reversal occurs. Foreign currency translation Amounts denominated in foreign currencies in these financial statements are translated into Canadian dollars on the following basis (a) Fair value of investments, current assets and current liabilities at the rate of exchange prevailing at year-end. (b) Purchase and sales of investments at exchange rates prevailing on the transaction dates. (c) Income and expense items at exchange rates prevailing on the transaction dates. The gain or loss resulting from translation is included in the statement of operations. Page 8

11 Notes to the financial statements March 31, Significant accounting policies (continued) Use of estimates The preparation of financial statements in conformity with ASNPO requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities and the amounts of revenue and expenses reported in the financial statements. The most significant areas requiring the use of management estimates relate to the investments. Actual results may ultimately differ from these estimates. 3. Investment information (a) Investments $ $ Canadian Equities 58,007,593 70,104,969 Foreign Equities 23,250,414 10,594,892 Canadian Pooled Equities s 14,380,304 8,167,671 Canadian Pooled Fixed Income s 11,959,604 12,652,765 Canadian Bonds (0.50% to 12.20%, expire up to June 2085) 25,654,489 25,136,599 Foreign Bonds (2.16% to 5.88%, expire up to May 2049) 5,204,769 3,310,556 Canadian Money Market 116,533 Canadian Segregated Savings Account 1,170, ,030 Canadian Discount Notes and Treasury bills (1%, expire up to June 2015) 609,216 1,038,376 Canadian bank acceptance and term deposit 139,155 Cash at the custodians 1,824,997 1,565, ,178, ,452,299 (b) Change in unrealized appreciation on investments $ $ $ Fair value 142,178, ,452, ,327,615 Cost 127,522, ,734, ,510,604 14,656,119 18,718,008 10,817,011 Change (4,061,889) 7,900,997 Page 9

12 Notes to the financial statements March 31, Interfund transfers For the year ended March 31, 2015, the Foundation made the following transfers between funds: General Projects General Endowment Designated Endowment $ $ $ $ Commitments (820,000) 1,160,000 (340,000) Project funding (297,183) 8,087,610 (7,790,427) Reallocation of investment income (1,666,349) 1,666,349 Charge for administration 1,026,772 (1,026,772) (1,756,760) 8,220,838 1,666,349 (8,130,427) 5. Outstanding donation pledges Outstanding donation pledges as at March 31, 2015, amounted to $18,023,529 ($15,947,891 as at March 31, 2014). These amounts have not been recognized in the financial statements. 6. Commitments and contingencies As at March 31, 2015, the Foundation s outstanding commitments to the MUHC amount to $717,000 ($991,000 as at March 31, 2014), and relate primarily to funding for the renovations for the installation of the functional MRI. 7. Financial instruments and risk management The Foundation is exposed to various risks throughout its financial instruments. Market risk Market risk represents the potential loss that can be caused by a change in the fair value of a security investment. The investments of the Foundation are subject to financial risks that arise from fluctuations of interest rates, foreign exchange rates, market fluctuations and the degree of volatility of these items in the stock market as they affect the value of investments. The Foundation s investment portfolio applies a diversification investment strategy to manage its risk and is monitored on a daily basis by various asset managers and quarterly by the Foundation s investment committee. Page 10

13 Notes to the financial statements March 31, Financial instruments and risk management (continued) Credit risk The Foundation is exposed to credit risk related to its investment in bonds to the extent that the bond issuers may be unable to pay their obligations when due. Concentration of credit risk exists when a significant portion of the portfolio is invested in securities with similar characteristics or subject to similar economic, political or other conditions. Management believes that the diversification strategy is adequate to protect the net assets of the Foundation from significant credit risks. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Foundation manages this risk by establishing realistic budgets, and adapting to changing environments throughout the year. The Foundation also manages its cash flow by maintaining sufficient cash balances to meet current obligations and investing in high quality government and corporate bonds and equity traded in an active market that can be liquidated should an unexpected obligation materialize. Currency risk The Foundation is exposed to foreign currency risk on a portion of its investments. See note 3(a) for amounts invested in foreign currencies. The majority of foreign investments are denominated in US dollars. In addition, some of the Canadian Pooled Equity s may also be subject to exposure to foreign currency risk on the underlying investments held. Interest rate risk Investments in bonds bear interest at fixed rates; however, a variation in the market rate will have an impact on the fair value of these instruments. Page 11