The Wood s Homes Foundation. Financial Statements December 31, 2014

Transcription

1 Financial Statements

2 April 22, 2015 Independent Auditor s Report To the Board of Directors of Wood s Homes Foundation We have audited the accompanying financial statements of Wood s Homes Foundation, which comprise the statement of financial position as at and the statements of operations and changes in fund balances 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 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. PricewaterhouseCoopers LLP Avenue SW, Suite 3100, Calgary, Alberta, Canada T2P 5L3 T: , F: , PwC refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

3 Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Wood s Homes Foundation 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. Chartered Accountants

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5 The Wood's Homes Foundation Statement of Operations and Changes in Fund Balances For the year ended Operating Legacy Capital Restricted Total Total Fund Fund Fund $ $ $ $ $ $ Revenue Contributions 916, ,481,831 2,398,408 1,920,399 Event revenue 764, , , ,499 Investment income 110, ,961-56, , ,315 Bequests , ,000 - Rental income (note 14) 104, , ,855 Net change in fair value of investments 11,054 44,819-16,237 72, ,024 Other income 3, ,065 3,869 1,909, ,780-2,012,239 4,141,340 3,023,961 Expenses Salaries and wages (note 14) 471, , ,563 Event expenses 245, , ,459 General and administrative 152,965 15,452-7, , ,032 Advertising and promotion 53, ,333 14,936 Contributions 25, ,000 - Amortization ,535-24,535 24,535 Consultants 20, ,707 59,366 Facility expenses 14, ,476 4,481 Education and other ,583 6,583 10, ,242 15,452 24,535 14,262 1,038, ,861 Excess (deficiency) of revenue over expenses 925, ,328 (24,535) 1,997,977 3,102,849 2,196,100 before the following Distribution of funds to Wood's Homes Society 505, ,424,284 1,929,887 1,896,122 Distribution of funds to Wood's Homes 471,232 82, , , ,835 82,335-1,424,284 2,483,454 2,215,274 Excess (deficiency) of revenue over expenses (51,756) 121,993 (24,535) 573, ,395 (19,174) Fund balances - beginning of year 329,371 2,147, , ,834 4,101,894 4,121,068 Interfund transfer (21,833) , Fund balances - end of year 255,782 2,269, ,487 1,355,360 4,721,289 4,101,894

6 The Wood's Homes Foundation Statement of Cash Flows For the year ended Total Total $ $ Operating activities Excess (deficiency) of revenue over expenses 619,395 (19,174) Items not affecting cash Unrealized losses (gains) on investments 477,748 (209,426) Donated investments (114,203) (67,654) Donated asset (235,000) - Amortization 24,535 24, ,475 (271,719) Net change in non-cash working capital affecting operations 181,358 86, ,833 (185,651) Investing activities Change in investments (819,775) (36,107) Receipts on mortgage receivable 11,546 45,265 (808,229) 9,158 Financing activities (Decrease) increase in due to Wood's Homes Society (24,245) 289,002 (Decrease) increase in due to Wood's Homes (186,473) 170,849 Decrease (increase) in loan receivable from Wood's Homes Society 1,601,555 (1,055,667) Payments on mortgage payable (9,018) (8,669) 1,381,819 (604,485) Increase (decrease) in cash and cash equivalents 1,527,423 (780,978) Cash - beginning of year 486,317 1,267,295 Cash and cash equivalents - end of year 2,013, ,317 Cash and cash equivalents consist of: Cash 513, ,317 Term deposits 1,500,000-2,013, ,317

7 1. Nature of the organization Wood's Christian Homes Endowment Fund Trust was established on April 24, 1990 as a public foundation under the Alberta Companies Act with funds contributed by Wood s Homes Society. On November 6, 2000 the Trust was restructured as a not-for-profit corporation under the name The Wood s Homes Foundation (the Foundation ). The purpose of the Foundation is to advance the mission, goals and objectives of Wood s Homes Society (the Society ) and Wood s Homes ( Wood s ). The Foundation has a separate independent Board of Directors. The Foundation may contribute an annual amount to the Society and/or Wood s on approval by the Foundation s Board of Directors. The Foundation has been registered as a charity under the Canadian Income Tax Act, and therefore, is exempt from tax. 2. Accounting policies Basis of accounting The financial statements have been prepared in accordance with Canadian accounting standards for notfor-profit organizations (ASNPO) as issued by the Canadian Accounting Standards Board. Fund accounting The Operating Fund reports the administrative and fundraising activities of the Foundation, including unrestricted contributions. This fund uses the deferral method of accounting for contributions. The Legacy Fund reflects transactions and balances related to amounts set apart from operations for the purpose of growth. This fund uses the deferral method of accounting for contributions. The Capital Fund reports transactions and balances related to the Foundation s capital activity. This fund uses the restricted fund method of accounting for contributions. The Restricted Fund reflects transactions and balances related to the Foundation s endowment funds and other externally restricted contributions. This fund uses the restricted fund method of accounting for contributions. Revenue recognition The Foundation follows the restricted fund method of accounting for contributions. Restricted contributions, bequests and endowment contributions are recognized as revenue of the appropriate restricted fund when received, or if no appropriate restricted fund exists, they are recognized in the Operating Fund as revenue when the related expenditures are incurred. Unrestricted contributions are recognized as revenue of the Operating Fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Restricted investment income is recognized as revenue in the fund in which it is earned. Unrestricted investment income and rental income are recognized as revenue in the Operating Fund. Event revenue is recognized in the Operating Fund when received or receivable and the event has occurred.

8 2. Accounting policies (continued) Use of estimates The financial statements of the Foundation have been prepared in accordance with Canadian accounting standards for not-for-profit organizations which require management to make assumptions and estimates that affect the reported amount of assets, liabilities, revenues and expenses. Actual amounts could differ from those estimates. Cash and cash equivalents Cash and cash equivalents include cash and short-term investments that have maturity dates of less than 90 days when purchased, are readily convertible to known amounts of cash and are subject to insignificant risk of change of value. Investments The Foundation carries its investments at fair value. Unrealized gains or losses on investments are reflected in the statement of operations. Capital assets Capital assets are recorded at cost. Donated capital assets are recorded at fair value at the date of contribution to the extent that fair value can be reasonably estimated. Amortization is recorded using the straight-line method over the following estimated useful lives: Buildings Software Furniture and Fixtures 40 years 3 years 10 years During the year, no capital assets were donated (2013 nil). Donated materials and services Donated materials and services, including volunteer services, are not recognized in the financial statements. Financial instruments The Foundation initially measures financial assets and financial liabilities at their fair value. It subsequently measures its financial assets and financial liabilities at amortized cost, other than investments which are reported at fair value. The financial assets subsequently measured at amortized cost include cash and cash equivalents, accounts receivable, loan receivable from Wood s Home Society and mortgage receivable. The financial liabilities measured at amortized cost include accounts payable and accrued liabilities, due to Wood s Homes Society, due to Wood s Homes, and mortgage payable. 3. Asset held for sale During the year, the Foundation received a bequest of a condominium. The condominium has been valued at its fair market value. It is the intention of the Foundation to sell the condominium as soon as possible.

9 4. Loan receivable from Wood s Homes Society The loan receivable from Wood s Homes Society is due on demand and bears interest at prime rate. During the year, $45,736 of interest income was recorded in investment income in the Statement of Operations (2013 $25,182). The full balance of the loan was received during the year. 5. Mortgage receivable The Foundation has two mortgage receivables related to the following: 1) A community home is owned by Wood s Homes Society. It carries a mortgage receivable of $168,750 bearing interest at an annual rate of 8.25%. Interest only is receivable monthly and the mortgage matures January 20 th, ) A multipurpose building owned by Parkland Youth Homes with a mortgage receivable of $Nil ( $11,546). During the year, interest income of $13,920 was recorded in investment income in the Statement of Operations (2013 $15,007). 6. Investments The Foundation s investments are professionally managed by an independent investment manager. Investments are comprised of the following: $ % $ % Managed Funds 3,762, ,325, Equities - - 1,980, ,762, ,306, During the year, $51,710 of interest income was included in investment income ( $51,943). 7. Capital assets Accumulated Net Book Net Book Cost Amortization Value Value $ $ $ $ Land 153, , ,230 Buildings 881, , , ,715 Software 87,009 87, Furniture and Fixtures 25,000 7,917 17,083 19,583 1,146, , , ,528

10 8. Due to Wood s Homes and Wood s Homes Society Current amounts due to Wood s Homes and Wood s Homes Society are non-interest bearing and due on demand. 9. Due to Wood s Homes Society $ $ Long term loan payable 390, ,508 Contribution payable 262,177 - Interest payable 17, , ,508 During fiscal 2004, the Wood s Homes Society loaned the Foundation $390,508 which was non-interest bearing with no terms of repayment. In fiscal 2014, the Foundation recorded a contribution of $262,177 (2013 nil) to Wood s Homes Society, which was included in the Statement of Operations and Changes in Fund Balances as a distribution of funds to Wood s Homes Society. Effective November 1, 2014, the total long-term amount due to Wood s Homes Society bears interest at the same rate of return earned on Foundation s investment portfolio, with no repayment terms. During the year, interest expense of $17,235 (2013 nil) was included in general and administrative expense on the Statement of Operations. 10. Mortgage payable $ $ Fixed rate term loan bearing interest at 3.947% with blended monthly principal and interest repayments of $1,500, maturing November 15, , ,784 Less: Current portion (9,380) (9,018) 213, ,766 The loan is secured by a first charge on the property and a $250,000 guarantee by Wood s Homes Society. There were no defaults on covenants during the year or the previous year. During the year, $8,986 of interest expense was recorded in general and administrative expense on the Statement of Operations ( $9,335).

11 10. Mortgage payable (continued) Contractual principal repayments for the remainder of the term are as follows: $ , ,385 Subsequent to year end, the balance of the mortgage payable was repaid. 11. Deferred contributions Deferred contributions represent externally restricted amounts received that have not been spent. These amounts are restricted for various programs at Wood s Homes. $ $ Balance beginning of year 1,184,005 1,212,414 Contributions received 659, ,214 Recognized as contribution revenue (478,929) (543,623) Balance end of year 1,364,603 1,184, Externally restricted fund balances $ $ Endowment Fund Earnings 41,052 32,720 Taylor Educational Fund 343, ,671 Perry Crisis/Opportunity Fund 39,424 27,609 Therapyship Fund 12,172 12,172 Knowledge House Fund 58,545 - Orphaned Policy Fund - 1,891 Capital Campaign Fund - 58,909 Research Chair Fund 738, ,980 1,233, ,952 Endowment Fund Earnings are composed of the accumulated investment income on endowment funds (note 13) that is restricted for distribution.

12 12. Externally restricted fund balances (continued) The Taylor Educational Fund, including related capital growth and investment income earned was transferred from Wood s on March 31, 2004 and is restricted to further the education of past and present residents of Wood s Homes. During the year, the funds distributed were $6,321 ( $4,069). The fund increased as a result of investment income earned on the balance. The Perry Crisis/Opportunity Fund was transferred from Wood s on March 31, 2004 and is a resource for individuals closely associated with Wood s Homes who find themselves in critical economic circumstances that threaten their career stability or continuation in a treatment program. During the year, the funds distributed were $262 ( $2,417). The fund increased as a result of investment income earned on the balance. The Therapyship Fund was established in 2004 to support the therapy and counselling program of the Eastside Family Centre. During the year, no amounts were distributed from this fund ( nil). The Knowledge House Fund was established to support research, training and development for ideas and programs focused on the mission of Wood s Homes. The Orphaned Policy Fund is restricted for the purpose of funding insurance premiums as required. During the year, the funds distributed were $1,891 ( $3,011). The Capital Campaign Fund is restricted for the purpose of construction on the Bowness campus for Wood s Homes Society. During the year, contributions and event revenues received were $1,354,888 ( $1,034,766) and the fund increased as a result of investment income earned on the balance. The amounts distributed during the year were $1,424,284 ( $1,461,406). The Research Chair Fund is restricted for the purpose of creating a research chair in partnership with the University of Calgary. During the year, contributions and bequests received were $537,240 ( $107,589) and the fund increased as a result of investment income earned on the balance. No amounts were distributed from this fund during the year ( nil). 13. Restricted for endowment Funds restricted for endowment purposes are subject to externally imposed restrictions stipulating that the resources be maintained in perpetuity. $ $ Terry Steward Lend a Hand Fund 7,059 7,059 Calgary Breakfast Club Educational Opportunities Fund 23,782 23,782 Career/Vocational Advancement Fund 28,406 28,406 Family Office Foundation Fund 5,782 5,782 Sports/Recreation Fund - 4,649 Arts/Music 8,650 8,650 General Endowment 48,554 48, , ,882 During the year, the original funder of the sports/recreation fund approved a transfer of the balance to the capital campaign fund.

13 14. Related party transactions Wood s Homes and Wood s Homes Society have an economic interest in the Foundation, as the Foundation holds resources that must be used to advance the mission of Wood s Homes (note 1) and Wood s Homes Society is responsible for certain of the Foundation s liabilities (note 9). Transactions between the Foundation, Wood s Homes Society and Wood s Homes are recorded at the exchange amount as follows: During the year, the Foundation recorded the following transactions with Wood s Homes Society: a) Received investment revenue of $13,920 ( $13,920) relating to a mortgage on a community home previously owned by the Foundation. b) Received interest income on a loan receivable from Wood s Homes Society $45,736 (2013 nil). c) Recorded a contribution of $1,929,887 ( $1,896,122) to Wood s Homes Society to advance the mission, goals and objectives of the agency. d) Incurred interest expense of $17,235 (2013 nil) on the long-term amount due to Wood s Homes Society. During the year, the Foundation recorded the following transactions with Wood s Homes: a) Received property rental income of $90,605 ( $90,605) relating to community homes owned by the Foundation. b) Contributed $553,707 ( $319,152) to Wood s Homes to advance the mission, goals and objectives of the agency. c) Paid $104,175 ( $34,725) to Wood s Homes for administrative and other salaries provided to Foundation. From January 1, 2014 to March 31, 2014, Wood s Homes provided executive support services and office rent for which no amount has been recorded in the statements. 15. Financial instruments Credit and interest risk The Foundation s credit risk exposure relates to cash and cash equivalents, accounts receivable, loan receivable and mortgage receivable balances. Interest risk exposure relates to mortgage receivables and payables. Management believes the Foundation s exposure to credit risk and interest risk is not significant. Price risk The investments of the Foundation are subject to price risk because changing interest rates impact the market value of the fixed rate investments, general economic conditions affect the market value of equity investments and currency exchange rate changes impact the market value of the investments denominated in currencies other than the Canadian dollar. The risk is mitigated through the use of an investment manager for the long term portfolio investments and by investing other funds in short term fixed rate products with high credit ratings. Liquidity risk The Foundation uses an investment manager for the investments it plans to hold for a long period of time. These investments are subject to liquidity risk if the Foundation is required to sell at a time that the market for the investments is unfavourable.

14 16. Fund-raising expenses Section 7(2) of the Charitable Fund-raising Act of Alberta requires the Foundation to disclose the expenses incurred for the purposes of soliciting contributions. During the year Foundation incurred: Remuneration to employees whose principle duties involve fund-raising: $165,422 Direct expenses incurred for the purpose of soliciting contributions: $43,903