THE TORONTO WALDORF SCHOOL FINANCIAL STATEMENTS JUNE 30, 2013

Transcription

1 FINANCIAL STATEMENTS JUNE 30, 2013

2 INDEPENDENT AUDITOR'S REPORT October 4, 2013 To the Members of The Toronto Waldorf School Report on the Financial Statements We have audited the accompanying financial statements of The Toronto Waldorf School, which comprise the statement of financial position as at June 30, 2013, statement of operations and changes in fund balances and statement 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 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 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 Toronto Waldorf School as at June 30, 2013, and its financial performance and its cash flow for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Emphasis of Matter Without qualifying our report, we draw attention to Note 2 in the financial statements which indicates the Organization's ability to continue as a going concern is dependent upon its ability to return to profitable operations. It is not possible to predict at this time whether the Organization will attain profitable levels of operations. These conditions indicate the existence of material uncertainty. Chartered Accountants Licensed Public Accountants

3 STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2013 ASSETS General Capital Asset Fund Fund Total Total CURRENT Cash 220, , ,886 Accounts receivable, note 6 114, , ,787 Government remittances recoverable 91,933-91,933 84,602 Prepaid expenses 32,622-32,622 30,858 Deposit on mortgage interest , , ,283 1,016,419 ACCOUNTS RECEIVABLE - LONG TERM, note 6 23,473-23,473 23,473 CAPITAL ASSETS, note 7-2,905,129 2,905,129 2,719, ,756 2,905,129 3,387,885 3,759,094 LIABILITIES AND NET ASSETS CURRENT Accounts payable and accrued liabilities 299, , ,106 Fee deposits, note 8 1,895,177-1,895,177 1,957,115 Deferred contributions, note 9 7,652-7,652 9,502 Current portion of sabbatical accrual, note 10 93,000-93,000 24,000 Current portion of capital leases, note 11-10,444 10,444 24,788 Mortgage payable, note 12-2,282,750 2,282,750 2,276,388 2,295,107 2,293,194 4,588,301 4,511,899 SABBATICAL ACCRUAL, note , , ,443 CAPITAL LEASE OBLIGATIONS, note 11-25,396 25,396 26,375 DEFERRED CONTRIBUTIONS RELATED TO CAPITAL ASSETS, note , , ,077 2,685,415 2,518,101 5,203,516 5,124,794 NET ASSETS (DEFICIENCY) Invested in capital assets - 387, , ,860 General (2,202,659) - (2,202,659) (1,664,560) (2,202,659) 387,028 (1,815,631) (1,365,700) 482,756 2,905,129 3,387,885 3,759,094 APPROVED ON BEHALF OF THE BOARD Director "See Accompanying Notes"

4 STATEMENT OF OPERATIONS AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, General Capital Asset Bursary Fund Fund Fund Total Total REVENUE Tuition fees 5,146, ,146,352 4,938,671 Donations and fundraising 167, , ,439 Children's camp 88, ,655 76,034 Amortization of deferred contributions related to capital assets - 15,003-15,003 10,000 Other income 170, , ,854 5,573,483 15,003-5,588,486 5,338,998 EXPENSES Salaries and benefits, note 10 4,128, ,128,773 3,974,745 Discounts, note 15 84, , ,173 Tuition adjustment, note , , ,116 Other teaching costs 182, , ,164 Marketing and development programs 227, , ,447 Children's camp 77, ,306 70,357 Property and building 239, , ,362 General operations 230, , ,859 Amortization of capital assets - 162, , ,361 Interest 8, , , ,403 5,179, , ,519 6,036,088 5,877,987 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES BEFORE EXTRAORDINARY ITEM 394,192 (376,275) (465,519) (447,602) (538,989) EXTRAORDINARY ITEM, note 17 2, ,329 13,174 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES 391,863 (376,275) (465,519) (449,931) (552,163) NET ASSETS (DEFICIENCY), BEGINNING OF YEAR (1,664,560) 298,860 - (1,365,700) (813,537) Interfund transfers, note 14 (929,962) 464, , NET ASSETS (DEFICIENCY), END OF YEAR (2,202,659) 387,028 - (1,815,631) (1,365,700) "See Accompanying Notes"

5 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, OPERATING ACTIVITIES Deficiency of revenues over expenses (449,931) (552,163) Items not requiring the use of cash Amortization of capital assets 162, ,361 Amortization of deferred contributions related to capital assets (15,003) (10,000) Amortization of deferred finance charges 35,113 47,224 Amortization of deposit on mortgage interest 88, ,500 (179,331) (173,078) Net change in non-cash working capital balances related to operation, note 19 63,269 46,304 Cash used in operations (116,062) (126,774) FINANCING ACTIVITIES Deferred finance charges (28,751) - Deferred contributions related to capital assets 33, ,873 Proceeds from capital leases 9,761 37,370 Principal repaid on capital leases (25,084) (33,244) Decrease in long term accounts receivable - 41,797 (10,637) 228,796 INVESTING ACTIVITIES Proceeds from disposal of short term investments - 750,117 Purchase of capital assets (348,627) (325,700) Proceeds from disposal of capital assets ,317 (348,131) 437,734 INCREASE (DECREASE) IN CASH (474,830) 539,756 CASH, BEGINNING OF YEAR 694, ,130 CASH, END OF YEAR 220, ,886 "See Accompanying Notes"

6 1. Status and Nature of Activities The Toronto Waldorf School was incorporated, January 26, 1970, under the laws of the Province of Ontario as a not-for-profit corporation. The purpose of the Organization is to establish, operate and maintain a school based on the work and indications of Rudolf Steiner. The Organization is a registered Charity under the Income Tax Act. 2. Basis of Presentation These financial statements have been prepared on a going concern basis which contemplates the realization of assets and the payment of liabilities in the ordinary course of operations. Should the Organization be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due. The Organization's ability to continue as a going concern is dependent upon its ability to return to profitable operations. It is not possible to predict at this time whether the Organization will attain profitable levels of operations. 3. Adoption of Accounting Standards for Not-For-Profit Organizations Effective July 1, 2012, the Organization adopted the requirements of the Canadian Institute of Chartered Accountants (CICA) Handbook Accounting, the new accounting framework: Canadian accounting standards for not-for-profit organizations. These are the Organization s first financial statements prepared in accordance with these accounting standards for not-for-profit organizations ("ASNFPO") and the transitional provisions. The change requires retrospective application of the accounting standards with certain elective exemptions and limited retrospective exceptions. The accounting policies set out in the following significant accounting policy note have been applied in preparing the financial statements for the year ended June 30, 2013 and the comparative information presented in these financial statements for the year ended June 30, The Organization issued financial statements for the year ended June 30, 2012 using Canadian generally accepted accounting principles previously prescribed by the CICA Handbook. The adoption of ASNFPO did not result in any adjustments to the previously reported assets, liabilities, net assets, excess (deficiency) of revenue over expenditures and cash flows of the Organization. An opening ASNFPO balance sheet at July 1, 2011 was not prepared as it is identical to the June 30, 2011 balance sheet included in the June 30, 2012 financial statements. 4. Accounting Policies (a) Basis of Presentation These financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. (b) Revenue Recognition The Organization uses the deferral method for reporting revenue and net assets wherein capital assets are recorded as long-term assets and their cost is amortized over the periods of use. (i) Tuition fees and other revenue are recorded as revenue in the statement of operations in the period the services have been provided.

7 4. Accounting Policies (continued) (b) Revenue Recognition (ii) Contributions received for designated purposes are deferred and recognized as revenue in the year in which the designated expenditures occur. Contributions in respect of capital projects undertaken and other restricted contributions to fund the purchase of capital assets are recorded as deferred contributions. Deferred contributions are amortized and recorded in revenue in the statement of operations at the same rate as the amortization expense on the related assets. (iii)revenue from donations is recorded when received. Pledges outstanding at year end are not recorded in the accounts since they are not legally enforceable claims. Pledges will be collected over terms ranging from one to three years and are estimated to amount to $111,524 as at June 30, 2013 ( $243,062). (c) Fund Accounting The accounts of the Organization have been segregated into the following funds for reporting purposes. The funds and the purpose of each are as follows: (i) General Fund Revenue and expenses related to program delivery and administrative activities are reported in the General Fund. (ii) Capital Asset Fund The Capital Asset Fund reports the assets, liabilities, revenues and expenses related to the Organization's capital assets. (iii)bursary Fund The Bursary Fund consists of the following: - A percentage of annual tuition revenues as determined by the Board of Directors. - Donations specifically for the purpose of tuition assistance programs. - Annual fund raising allocations as determined by the Board of Directors. - Interest and other invested income earned on Bursary Fund assets. (d) Capital Assets Purchased capital assets are stated at cost which includes significant improvements thereto. Contributed capital assets are recorded at the fair market value at the date of contribution. Maintenance and repairs, which do not improve or extend the useful life of these assets, are expensed annually. Amortization is provided on a declining balance basis using the following rates: Building 4 % Parking lot 5 % School, office and computer equipment 20 % Furniture and fixtures 30 % Automotive equipment 30 % Website Development 20 % (e) Contributed Services Volunteers contribute substantial time to assist The Toronto Waldorf School in carrying out its program activities. Because of the difficulty of determining the fair value, contributed services are not recognized in the financial statements.

8 4. Accounting Policies (continued) (f) Gifts in Kind Gifts in kind received by the Organization are recorded at their estimated fair market value. (g) Use of Estimates The preparation of the Organization's financial statements, in accordance with Canadian accounting standards for not-for-profit organizations, requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the year. Significant items subject to estimates and assumptions include the estimated useful lives of capital assets and the allowance for doubtful accounts. Due to the inherent uncertainty involved with making such estimates, actual results could differ from those reported. These estimates are reviewed periodically and adjustments are made to income as appropriate in the year they become known. (h) Financial Instruments (i) Measurement of Financial Instruments The Organization initially measures its financial assets and financial liabilities at fair value adjusted by, in the case of a financial instrument that will not be measured subsequently at fair value, the amount of transaction costs directly attributable to the instrument. The Organization subsequently measures all of its financial assets and financial liabilities at amortized cost. Financial assets measured at amortized cost include cash, accounts receivable and government remittances recoverable. Financial liabilities measured at amortized cost include accounts payable and accrued liabilities, sabbatical accrual, capital lease obligations, fee deposits, deferred contributions and mortgage payable. (ii) Impairment At the end of each reporting period, the Organization assesses whether there are any indications that a financial asset measured at amortized cost may be impaired. The carrying amount of the asset is reduced directly or through the use of an allowance account. The amount of the reduction is recognized as an impairment loss in the statement of income.

9 5. Financial Instrument Risk It is management's opinion that the Organization is not exposed to significant currency, foreign exchange or other price risks arising from its financial instruments. Other identified risks are as follows: (i) Credit Risk Credit risk refers to the risk that the fair value of financial instruments or future cash flows associated with the instruments will fluctuate due to the changes in the collectability of receivables. Cash is exposed to credit risk as the amounts on deposit exceed the federally insured limits. The Organization minimizes its exposure by depositing cash at TD Canada Trust, a major financial institution. The Organization is also exposed to credit risk on its accounts receivable. The credit risk associated with accounts receivable is minimized by the Organization's large and diverse enrolment base. The Organization continually monitors the aging of its receivables and does not have a history of significant bad debt write-offs due to its monitoring procedures. (ii) Interest Rate Risk Interest rate risk refers to the risk that the fair value of financial instruments or future cash flows associated with the instruments will fluctuate due to changes in the market interest rates. The Organization is subject to interest rate risk on its mortgage, which is due to be renewed during the year with terms that have yet to be determined. (ii) Liquidity Risk Liquidity risk is the risk that the Organization will not be able to meet a demand for cash or fund its obligations as they come due. The Organization meets its liquidity requirements by preparing and monitoring detailed budgets and holding assets that can be readily converted into cash. 6. Accounts Receivable Accounts receivable are comprised of the following: Accounts receivable 170, ,156 Less: Allowance for doubtful accounts 32,027 7, , ,260 Less: Amounts due within one year 114, ,787 Accounts receivable - long term 23,473 23,473

10 7. Capital Assets Accumulated Cost Amortization Net Net Land 438, , ,494 Building 4,032,840 2,162,279 1,870,561 1,893,447 Parking lot 323,830 70, ,832 96,733 School, office and computer equipment 834, , , ,996 Furniture, fixtures and maintenance equipment 203, ,692 25,324 47,554 Automotive equipment 24,421 15,876 8,545 12,208 Website development 90,148 62,388 27,760 34,700 Trademark 4,431 1,668 2,763 3,070 5,952,055 3,046,926 2,905,129 2,719,202 During the year, capital assets were acquired at an aggregate cost of $348,627 ( $325,700), of which $9,761 ( $37,370) was financed by capital lease, and $338,866 ( $288,330) by cash payments. Independent appraisals of the land dated August 17, 2009 and April 1, 2010 reported the market value of the land to be $11,030, Fee deposits Fee deposits represent amounts for tuition which relate to and will be included in revenue in the school year. 9. Deferred Contributions Deferred contributions are donations received to fund designated operating expenditures of future periods. 10. Sabbatical Leave After eight years of continual service full-time faculty are permitted to take an annual sabbatical leave. One half of their current salary will be paid during the leave. The Organization accrues sabbatical costs as earned by the faculty over the eight-year period. The total estimated liability for sabbatical leave for both full-time and pro-rated faculty at June 30, 2013 is $483,308 ( $429,443).

11 11. Capital Lease Obligations Computer lease, interest at 14.25% repayable in monthly blended principal and interest installments of $842, due September ,224 10,620 Equipment lease, interest at 3.00% repayable in quarterly blended principal and interest installments of $1,661, due November ,221 30,866 Equipment lease, interest at 11.50% repayable in monthly blended principal and interest installments of $215, due March ,395 - Computer lease, due January ,561 Computer lease, due January ,116 35,840 51,163 Current portion of capital leases 10,444 24,788 25,396 26,375 Approximate principal repayments required are as follows: , , , , ,852 35, Mortgage Payable Mortgage payable, interest at 8.50%, interest only payments of $16,292, due April 2014, collateralized by certain lands and the building of the Organization, a general security agreement and a general assignment of all rent, income and profits arising from or in connection with the property 2,300,000 - Mortgage payable, due January ,300,000 Less: Unamortized financing fees and transaction costs (17,250) (23,612) 2,282,750 2,276,388 The Organization entered into a new mortgage agreement on May 1, The Organization incurred $23,000 in finance charges relating to the new mortgage. The charges are being amortized over 1 year to match the term of the mortgage. The unamortized finance charges relating to the previous mortgage were fully amortized in the year. Included in interest expense is amortization of $35,113 ( $47,224) for finance fees and transaction costs.

12 13. Deferred Contributions Related to Capital Assets Deferred contributions related to capital assets represent the unamortized amount of restricted donations received for renovations to the building and the purchase of furniture and fixtures Balance at beginning of year 181,077 8,204 Contributions received 33, ,873 Less: Amounts amortized to revenue (15,003) (10,000) 199, , Interfund Transfers and Restricted Fund Balances The Board of Directors annually transfer resources to be used for tuition assistance, bursary awards and to fund the Capital Asset Fund. 15. Discounts Discounts consist of the following: Return discount 3,750 35,298 Full payment discount 80,585 72,875 84, , Tuition Adjustment Tuition adjustment consists of the following: Families 463, ,198 Administrative costs 1,977 5, , , Extraordinary Item In the fall of 2010, a teacher at the Organization was arrested and charged with two counts of sexual assault related to an incident in the 1980's and an incident in the 1990's. The teacher's employment ended in the 2011 fiscal year and he subsequently pled guilty. The Organization incurred extraordinary expenses in the school year in the amount of $2,329 ( $13,174) including staffing costs, legal costs, public relations support, travel costs and therapeutic support for the victims, students, staff, parents and others in the community. At this time, the organization believes there is no contingent liability related to this matter. 18. Banking Facility The Organization has arranged a revolving operating loan which permits borrowing to a maximum of $200,000, repayable on demand with interest at prime plus 1%. The indebtedness is collateralized by a general security agreement over the assets of the Organization. 19. Net Change in Working Capital Balances Related to Operations Accounts receivable 3,115 (51,079) Government remittances recoverable (7,331) (16,613) Prepaid expenses (1,764) (8,185) Accounts payable and accrued liabilities 79,172 (10,887) Fee deposits (61,938) 108,440 Deferred contributions (1,850) (2,780) Sabbatical accrual 53,865 27,408 63,269 46, Reclassification The comparative figures for 2012 have been reclassified where necessary to conform with the 2013 financial statement presentation.