THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA. Financial Statements

Transcription

1 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA Financial Statements March 31, 2015

2 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA MANAGEMENT S RESPONSIBILITY FOR FINANCIAL REPORTING The financial statements of the Chartered Accountants Education Foundation of British Columbia (the CAEF ) are the responsibility of the management of the Institute of Chartered Accountants of British Columbia (the Institute ). The financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. The significant accounting policies used are described in Note 1 to the financial statements. The financial statements include, where appropriate, estimates based on the best judgment of management. As part of its responsibilities the Institute maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable cost. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate, and that the CAEF s assets are appropriately accounted for and adequately safeguarded. The Board of Governors of the CAEF (the Board ) carry out their responsibilities with regard to the financial statements mainly through the Institute s Audit Committee (the Committee ). The Committee reviews the annual financial statements and recommends them to the Board of Governors for approval. The Committee meets periodically with management and the external auditors. Following these meetings, the Committee meets privately with the auditors to ensure free and open discussion of any subject the Committee or the auditors wish to pursue. The Committee also recommends the engagement or re-appointment of the external auditors, reviews the scope of the audit and approves the fees of the external auditors for audit and non-audit services. The financial statements have been recommended for approval by the Committee. In addition, the financial statements have been audited by BDO Canada LLP in accordance with Canadian generally accepted auditing standards. June 8, 2015 Richard Rees, CPA, FCA Chief Executive Officer Jan Sampson, CPA, FCA Chief Operating Officer 1

3 Tel: Fax: BDO Canada LLP 600 Cathedral Place 925 West Georgia Street Vancouver BC V6C 3L2 Canada Independent Auditor s Report To the Members of the The Institute of Chartered Accountants of British Columbia We have audited the accompanying financial statements of The Chartered Accountants Education Foundation of British Columbia, which comprise the Statement of Financial Position as at March 31, 2015, and the Statements 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 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 Chartered Accountants Education Foundation of British Columbia as at March 31, 2015, and its results of operations, changes in net assets, and cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Report on Other Legal and Regulatory Requirements As required by the Society Act (British Columbia), we report that, in our opinion, the accounting principles in Canadian accounting standards for not-for-profit organizations have been applied on a basis consistent with that of the preceding year. Chartered Accountants Vancouver, British Columbia June 8, 2015 BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

4 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA STATEMENT OF FINANCIAL POSITION As at March ASSETS Cash $ 27,117 $ 1,547 Accounts receivable from related party (Note 6) 36,200 - Investments (Note 2) 1,818,707 1,751,393 Interest receivable 3,995 3,847 GST receivable 530 1,053 1,886,549 1,757,840 Doctoral support receivable (Note 3) 47,500 50,000 $ 1,934,049 $ 1,807,840 LIABILITIES Educational funding payable $ 10,000 $ 2,000 Accounts payable and accrued liabilities 11,863 9,652 21,863 11,652 NET ASSETS Externally restricted (Note 4) 66,093 64,593 Internally restricted (Note 4) 976, ,255 Unrestricted (Note 4) 869, ,340 1,912,186 1,796,188 $ 1,934,049 $ 1,807,840 See accompanying notes Approved on behalf of the Board of Governors: Governor Governor 3

5 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA STATEMENT OF OPERATIONS Year ended March REVENUES Earned investment income Vancouver Foundation $ 16,127 $ 15,468 Investment income, realized (Note 2) 132,604 81,395 Institute of Chartered Accountants of British Columbia (Note 6) 36,200 50,445 Donations from members of the Institute of Chartered Accountants of British Columbia 17,133 6,729 Other donations - 20,000 Doctoral support repayable (Note 3) 10,000 50, , ,037 EXPENSES Educational funding Universities and colleges 25,000 25,000 Doctoral support program (Note 3) 10,000 10,000 Scholarship and bursaries 59,350 48,850 Events 13,678 68, , ,863 Investment fee 12,508 12,143 Administrative Audit and legal 7,865 7,116 Meetings 2, General office ,784 20,002 Total Expenses 130, ,865 EXCESS OF REVENUES OVER EXPENSES BEFORE UNREALIZED GAIN ON INVESTMENTS 81,252 52,172 Unrealized gain on investments at year end 34, ,388 EXCESS OF REVENUES OVER EXPENSES $ 115,998 $ 218,560 See accompanying notes 4

6 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA STATEMENT OF NET ASSETS Year ended March 31 Externally Restricted Internally restricted Unrestricted Total NET ASSETS, BEGINNING OF YEAR Excess of revenues over expenses NET ASSETS, END OF YEAR $ 64,593 $ 974,255 $ 757,340 $ 1,796,188 1,500 1, , ,998 $ 66,093 $ 976,209 $ 869,884 $ 1,912,186 See accompanying notes 5

7 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA STATEMENT OF CASH FLOWS Year ended March OPERATING ACTIVITIES Cash Receipts Earned investment income Vancouver Foundation $ 16,127 $ 15,389 Investment income (Note 2) 132,456 81,395 Doctoral support receivable payments 12,500 Donations received 17,133 77, , ,958 Cash Disbursements Educational funding 100, ,850 Educational symposium - 51,013 Payments to suppliers 20,050 18, , ,486 58,138 2,472 INVESTING ACTIVITIES Reinvestment of investment income (90,044) (63,379) Purchase of investments (45,000) - Redemption of investments 102,476 55,984 32,568 (7,395) NET INCREASE (DECREASE) IN CASH 25,570 (4,923) CASH, BEGINNING OF YEAR 1,547 6,470 CASH, END OF YEAR $ 27,117 $ 1,547 See accompanying notes 6

8 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA NOTES TO FINANCIAL STATEMENTS March 31, 2015 PURPOSE The Chartered Accountants Education Foundation of British Columbia ( CAEF ) was incorporated on July 12, 1990 under the Society Act (British Columbia) to advance accounting education in British Columbia. The CAEF intends to achieve this goal by enhancing the quality and quantity of students entering the profession, sponsoring relevant and practical research, and stimulating the ongoing educational experience of members and students of the Institute of Chartered Accountants of British Columbia (the Institute ). The CAEF is a public foundation under the Income Tax Act (Canada) and as such is exempt from income taxes and able to issue donation receipts for income tax purposes. 1. SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting The financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations. All revenues and expenses are accounted for on the accrual basis of accounting, except donations over which the Foundation has no control, which are recorded when received. b) Accounting for Educational Funding In 2006, the CAEF launched a new program of financial support in the form of forgivable loans for Chartered Accountants pursuing doctoral studies to prepare them for a career in teaching and research in accounting, assurance or taxation. These loans are forgivable if the candidate earns the doctoral degree and teaches at a BC post secondary educational institution. Each loan installment is recorded as an expense at the date the candidate is eligible to receive it, and any recoveries due to conditions not being met are recorded as receivable at such time as this becomes determinable. c) 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 and disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The areas requiring management estimates are accrued liabilities and the amount of educational funding payable. d) Donated Services The CAEF benefits from donated services in the form of volunteer time for various committees and the provision of management, accounting and administrative services from the Institute. The value of donated services is not recognized in these financial statements. 7

9 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA NOTES TO FINANCIAL STATEMENTS March 31, SIGNIFICANT ACCOUNTING POLICIES (Continued) e) Investments Investments are initially recognized and subsequently measured at fair value, determined using market information. Transaction costs and net gains and losses arising from changes in fair value are immediately recognized in operations. 2. INVESTMENTS The CAEF holds its investments in mutual funds on which it may earn interest and dividend income. Investments in mutual funds are valued at their reported net asset value and as a result are subject to both appreciation and depreciation in fair value, which is recognized in the statement of operations. These investments can be redeemed at any time. Throughout the year the underlying investments held were comprised of a mix of 44% of fixed income securities and 56% of equities, and include Canadian and foreign investments with bond ratings ranging from BBB to AAA. Effective interest rates are.87 % to 3.0% ( % to 3.20%). The CAEF s investment philosophy is to invest conservatively with highly rated counterparties with the objective of preserving the purchasing power of the Foundation s capital over the long term while earning a reasonable rate of return. Investment income is comprised of the following: Interest income $ 89,990 $ 63,351 Realized gains Investment firm rebate 42, , $ 132,604 $ 81, DOCTORAL SUPPORT PROGRAM The doctoral support program funds CAs pursuing a doctorate. Under the terms of the doctoral support program agreements, the candidates must be enrolled in an approved doctoral program at the time of the funding, complete all requirements for the doctoral degree within five years of commencing the doctoral program and teach accounting at a British Columbia post secondary educational institution immediately upon completion of the doctorate (one year of teaching for each year of support). Over the last nine years, five candidates have been supported with a total of $117,500. During 2014, the terms under one of the funding arrangements were contravened. The $50,000 funded over the term is repayable over five years commencing January 1, 2015 at an interest rate of 3% on the average value of the repayable portion for the year. During 2015, another recipient returned $10,000 of a forgiveable loan of $20,000 under this program. The recipient has retired though will continue teaching, on a part-time basis, at a BC university. The recipient has been approved for partial forgiveness under the terms of the agreement. 8

10 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA NOTES TO FINANCIAL STATEMENTS March 31, NET ASSETS Details of the net assets are as follows: Externally Restricted Funds Scholarship and endowment fund $ 66,093 $ 64,593 Internally Restricted Funds Donations from members 540, ,217 Bequests 432, ,920 Anonymous donation to support accounting educators 2,440 16, , ,255 Unrestricted Contribution from the Memorial Scholarship Fund 86,929 86,929 Accumulated excess of revenues over expenditures 782, , , ,340 $ 1,912,186 $ 1,796,188 Externally restricted funds have been specifically designated by donors for scholarships and endowment funds. Internally restricted funds are comprised of donations for specific programs, bequests and general donations which are internally restricted for a minimum period of ten years. The CAEF currently maintains the internal restriction on donations from members indefinitely, as the interest income from investments is sufficient to support current operations. Included in unrestricted net assets is the contribution from the Memorial Scholarship Fund. When the fund was dissolved, the residual funds were transferred to the CAEF. Awards for educational funding are made in recognition of or in the name of: Alexander Campbell Geoffrey W.J. Carter John Hadfield Jim Miller Educational Endowment Fund Desmond O Brien William G. Rowe Peter Stanley 9

11 THE CHARTERED ACCOUNTANTS EDUCATION FOUNDATION OF BRITISH COLUMBIA NOTES TO FINANCIAL STATEMENTS March 31, VANCOUVER FOUNDATION The CAEF holds $345,000 in contributed principal with the Vancouver Foundation. The market value of these funds at year end is $488,601 ( $457,697). In accordance with the provisions of the Vancouver Foundation Act, the amounts are held permanently by the Vancouver Foundation. As the CAEF has the right to receive only the investment income on these funds and has no access to the contributed principal, the CAEF financial statements do not include amounts placed with the Vancouver Foundation. 6. RELATED PARTY INFORMATION The CAEF elects its Board of Governors from among candidates recommended by the Institute s Council. The CAEF receives management, accounting and administrative services from the Institute without charge, and is charged only for costs incurred on its behalf. These transactions are in the normal course of operations and are measured at the exchange amount, the amount of consideration established and agreed to by related parties. The Institute provided CAEF with a specific purpose donation of $ 36,200 ( $50,445). 7. FINANCIAL INSTRUMENTS The CAEF s financial instruments consist of cash, accounts receivable, investments, doctoral support receivable, interest receivable, educational funding payable, and accounts payable and accrued liabilities. Interest Rate Risk The CAEF manages interest rate risk exposure by holding its fixed income investments through holdings in mutual funds, as summarized in Note 2, which are professionally managed. The performance of the fund managers is monitored by the Board of Governors. The market value of the fixed income investments will fluctuate with changes in interest rates. Currency Risk The CAEF mitigates the currency risk exposure of its foreign investments through diversification. The Canadian, United States and International portion of the portfolio was 70%, 15% and 15% respectively at March 31, 2014 ( %, 15% and 14%). Credit and Market Risk The CAEF has an investment policy that restricts the types and amounts of its eligible investments and requires dealing with highly rated counterparties. The investments held by the CAEF were compliant with the investment policy throughout the years ended March 31, 2015 and Risk and volatility of investment returns are mitigated through the diversification of investments in different geographic regions and different investment vehicles, however the equity investments are subject to change in value with fluctuations in market prices. The Institute did not hold any asset-backed commercial paper or hedge funds during the year. 10