PRESIDENT'S CHOICE CHILDREN'S CHARITY/LA FONDATION POUR LES ENFANTS LE CHOIX DU PRÉSIDENT

Transcription

1 Financial Statements of PRESIDENT'S CHOICE CHILDREN'S CHARITY/LA FONDATION POUR LES ENFANTS LE

2 KPMG LLP Telephone (416) Yonge Corporate Centre Fax (416) Yonge Street Suite 200 Internet Toronto ON M2P 2H3 Canada INDEPENDENT AUDITORS' REPORT To the Board of Directors of President's Choice Children's Charity/ La Fondation Pour Les Enfants Le Choix Du Président We have audited the accompanying financial statements of President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président, which comprise the statement of financial position as at December 31, 2013, the statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising 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. Auditors' 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 our 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, we consider 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 qualified audit opinion. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. KPMG Canada provides services to KPMG LLP.

3 Page 2 Basis for Qualified Opinion In common with many charitable organizations, President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président derives revenue from donations and fundraising, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, verification of these revenues was limited to the amount recorded in the records of President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président. Therefore, we were not able to determine whether, as at and for the year ended December 31, 2013, any adjustments might be necessary to donations and excess (deficiency) of revenue over expenses reported in the statement of operations, deficiency of revenue over expenses reported in the statement of cash flows and current assets and unrestricted net assets reported in the statement of financial position. Qualified Opinion In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président as at December 31, 2013, and its results of operations, its changes in net assets and its cash flows for the year then ended in accordance with Canadian accounting standards for not-forprofit organizations. Report on Other Legal and Regulatory Requirements As required by the Canada Corporations Act, we report that, in our opinion, the accounting policies applied in preparing and presenting the financial statements in accordance with Canadian accounting standards for not-for-profit organizations have been applied on a basis consistent with that of the preceding year. Chartered Professional Accountants, Licensed Public Accountants June 12, 2014 Toronto, Canada

4 Statement of Financial Position December 31, 2013, with comparative information for 2012 Assets Current assets: Cash $ 8,679,092 $ 9,073,453 Accounts receivable (note 4) 1,338,615 1,993,074 10,017,707 11,066,527 Long-term investments (note 3) 2,118,183 2,118,183 Liabilities and Net Assets $ 12,135,890 $ 13,184,710 Current liabilities: Accrued liabilities $ 144,965 $ 135,484 Funds committed for charitable donations (note 9) 3,564,304 3,744,875 3,709,269 3,880,359 Net assets: Unrestricted 5,980,555 4,986,181 Internally restricted (note 6) 1,261,293 2,325,702 Restricted 1,184,773 1,992,468 8,426,621 9,304,351 Commitments (note 9) $ 12,135,890 $ 13,184,710 See accompanying notes to financial statements. On behalf of the Board: Director Director 1

5 Statement of Operations, with comparative information for Unrestricted Restricted Total Total Revenue: Donations: National events and promotions, gross revenue (note 5) $ 2,524,405 $ $ 2,524,405 $ 2,473,364 Corporate donation (note 2) 1,800,000 1,800,000 1,800,000 Regional income 464,444 9,488,715 9,953,159 9,003,612 Interest 59,720 59,720 78,767 4,848,569 9,488,715 14,337,284 13,355,743 Expenses: Charitable donations 500,000 13,754,535 14,254,535 13,130,945 Fundraising - national events (note 5) 323, , ,168 Marketing 80,294 80,294 79,483 Administration 556, , ,379 1,460,479 13,754,535 15,215,014 14,166,975 Excess (deficiency) of revenue over expenses $ 3,388,090 $ (4,265,820) $ (877,730) $ (811,232) See accompanying notes to financial statements. 2

6 Statement of Changes in Net Assets, with comparative information for Internally Unrestricted restricted Restricted Total Total (note 6) Net assets, beginning of year $ 4,986,181 $ 2,325,702 $ 1,992,468 $ 9,304,351 $ 10,115,583 Excess (deficiency) of revenue over expenses 3,388,090 (4,265,820) (877,730) (811,232) Interfund transfers (note 6) (2,393,716) (1,064,409) 3,458,125 Net assets, end of year $ 5,980,555 $ 1,261,293 $ 1,184,773 $ 8,426,621 $ 9,304,351 See accompanying notes to financial statements. 3

7 Statement of Cash Flows, with comparative information for 2012 Cash provided by (used in): Operating activities: Deficiency of revenue over expenses $ (877,730) $ (811,232) Change in non-cash operating working capital 483,369 (1,126,055) (394,361) (1,937,287) Investing activities: Net increase in long-term investments (118,183) Decrease in cash (394,361) (2,055,470) Cash, beginning of year 9,073,453 11,128,923 Cash, end of year $ 8,679,092 $ 9,073,453 See accompanying notes to financial statements. 4

8 Notes to Financial Statements President's Choice Children's Charity/La Fondation Pour Les Enfants Le Choix Du Président (the "Organization") was incorporated as a corporation without share capital under Part II of the Canada Corporations Act on April 10, The Organization is committed to helping Canadian children live life well with a focus on children with disabilities and/or lack of access to proper nutrition. The Organization is a registered charity under the Income Tax Act (Canada) and, accordingly, is exempt from income taxes, provided certain requirements of the Income Tax Act (Canada) are met. 1. Significant accounting policies: The financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the Chartered Professional Accountants of Canada Handbook. (a) Fund accounting: (i) Unrestricted fund: The purpose of the unrestricted fund is to record the day-to-day operations of the Organization, including the receipt and use of donations and interest with no external restrictions. (ii) Restricted fund: The Organization collects donations from four Canadian regions: Ontario, Western, Québec and Atlantic. Specific fundraising events stipulate that funds collected in these regions will be used for the benefit of children in these regions and have been recorded as restricted funds. (b) Revenue recognition: The Organization follows the restricted fund method of accounting for contributions. 5

9 Notes to Financial Statements (continued) 1. Significant accounting policies (continued): Unrestricted contributions are recognized as revenue in the general fund 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 of the appropriate restricted fund when received. (c) Financial instruments: Financial instruments are recorded at fair value on initial recognition. Equity instruments that are quoted in an active market are subsequently measured at fair value. All other financial instruments are subsequently recorded at cost or amortized cost, unless management has elected to carry the instruments at fair value. The Organization has not elected to carry any such financial instruments at fair value. (d) Donated goods and services: The Organization receives donated goods that are used in fundraising events. The fair value of these goods has not been recognized in the financial statements as it is not determinable. A substantial number of volunteers contribute a significant amount of their time each year. Because of the difficulty of determining the fair value, contributed services are not recognized in the financial statements. Accounting and administrative time is donated by Loblaw Companies Limited ("Loblaw"). This donation of salary has been included in the financial statements, on a cost recovery basis. 6

10 Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (e) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. 2. Loblaw Companies Limited: Loblaw made a corporate donation of $1,800,000 ( $1,800,000), which is recognized in the financial statements, to fund the cost of all administrative and some operational expenses of the Organization. Loblaw also directly bears the cost of some administrative expenses but these amounts are not material to these financial statements. 3. Investments: Long-term investments consist of cashable escalating rate Guaranteed Investment Certificates ("GICs") with a three-year term, maturing on May 22, 2015 and annual interest rates of 0.7%, 1.0% and 2.4%, respectively. 4. Accounts receivable: Accounts receivable includes $880,138 ( $1,606,482) of pledges receivable, the majority of which has been received subsequent to year end. 5. Donations: The Organization holds several annual national fundraising events and promotions. The contributions from national events are recorded as unrestricted funds and the net proceeds are allocated to the various regions. Proceeds from national promotions are generated from sales in their respective regions and are recorded as restricted funds. 7

11 Notes to Financial Statements (continued) 5. Donations (continued): The financial results of these events were as follows: Revenue Expenses Net Net National events: Bowlerama $ 1,113,596 $ 37,039 $ 1,076,557 $ 1,015,006 Golf tournament 1,410, ,541 1,124,268 1,132,190 $ 2,524,405 $ 323,580 $ 2,200,825 $ 2,147, Internally restricted funds: Internally restricted funds represent the transfer of net proceeds allocated from the unrestricted fund to the regions, for the purpose of assisting them in funding charitable commitments. The amount allocated for the year ended December 31, 2013 totalled $2,393,716 ( $1,620,828). Of the available funds, $3,458,125 ( $1,426,787) was transferred to offset regional restricted fund deficiencies. Interfund transfers are summarized as follows: Internally Unrestricted restricted Restricted National events allocation $ (2,393,716) $ 2,393,716 $ Offset regional restricted fund deficiencies (3,458,125) 3,458,125 $ (2,393,716) $ (1,064,409) $ 3,458,125 8

12 Notes to Financial Statements (continued) 7. Regional results: The financial results by region are summarized as follows: 2013 National Ontario Western Québec Atlantic Total Revenue: National events, net $ 2,200,824 $ $ $ $ $ 2,200,824 Other 2,324,164 4,031,277 2,481,322 1,605,964 1,370,152 11,812,879 4,524,988 4,031,277 2,481,322 1,605,964 1,370,152 14,013,703 Expenses: Charitable donations 500,000 6,013,156 3,424,929 2,651,206 1,665,244 14,254,535 Other 636, ,898 1,136,898 6,013,156 3,424,929 2,651,206 1,665,244 14,891,433 Excess (deficiency) of revenue over expenses 3,388,090 (1,981,879) (943,607) (1,045,242) (295,092) (877,730) Interfund transfer (2,393,716) 1,590, , ,374 (391,732) (943,607) (241,673) (295,092) (877,730) Net assets, beginning of year 4,986, ,610 2,886, , ,895 9,304,351 Net assets, end of year $ 5,980,555 $ 3,878 $ 1,943,385 $ $ 498,803 $ 8,426,621 Allocated as follows: Unrestricted $ 5,980,555 $ $ $ $ $ 5,980,555 Internally restricted 762, ,803 1,261,293 Restricted 3,878 1,180,895 1,184,773 $ 5,980,555 $ 3,878 $ 1,943,385 $ $ 498,803 $ 8,426,621 9

13 Notes to Financial Statements (continued) 7. Regional results (continued): 2012 National Ontario Western Québec Atlantic Total Revenue: National events, net $ 2,147,196 $ $ $ $ $ 2,147,196 Other 2,324,735 3,655,625 2,386,044 1,438,770 1,077,205 10,882,379 4,471,931 3,655,625 2,386,044 1,438,770 1,077,205 13,029,575 Expenses: Charitable donations 2,145,000 4,857,280 3,052,476 1,459,730 1,616,459 13,130,945 Other 709, ,862 2,854,862 4,857,280 3,052,476 1,459,730 1,616,459 13,840,807 Excess (deficiency) of revenue over expenses 1,617,069 (1,201,655) (666,432) (20,960) (539,254) (811,232) Interfund transfer (1,620,828) 1,134, , ,966 (3,759) (67,285) (286,940) 86,006 (539,254) (811,232) Net assets, beginning of year 4,989, ,895 3,173, ,667 1,333,149 10,115,583 Net assets, end of year $ 4,986,181 $ 395,610 $ 2,886,992 $ 241,673 $ 793,895 $ 9,304,351 Allocated as follows: Unrestricted $ 4,986,181 $ $ $ $ $ 4,986,181 Internally restricted 353, , , ,630 2,325,702 Restricted 42,328 1,923,799 11,076 15,265 1,992,468 $ 4,986,181 $ 395,610 $ 2,886,992 $ 241,673 $ 793,895 $ 9,304, Financial risks: In the normal course of business, the Organization manages risks that arise as a result of its use of financial instruments. These risks include market, liquidity and credit risks. Market risk is managed through investments in GICs with Canadian financial institutions. Accounts receivable consist of pledges receivable from suppliers and Loblaw stores. It is management's opinion that the Organization is not exposed to significant interest or credit risks arising from these financial instruments. 10

14 Notes to Financial Statements (continued) 9. Commitments: The amount accrued for funds committed for charitable donations is approved by the Board of Directors at year end. The Organization is the national premier sponsor of Breakfast for Learning, a non-profit organization dedicated to child nutrition programs in Canada. In November 2012, the Board of Directors approved funding of $5,800,000 to Breakfast for Learning, of which $2,800,000 was disbursed in 2013, and $3,000,000 will be disbursed in