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) Chartered Accountants Fax (416) Yonge Corporate Centre Internet Yonge Street Suite 200 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 statements of financial position as at December 31, 2012, December 31, 2011 and January 1, 2011, the statements of operations, changes in net assets and cash flows for the years ended December 31, 2012 and December 31, 2011, 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 audits. We conducted our audits 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 in our audits 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 years ended December 31, 2012 and December 31, 2011, any adjustments might be necessary to donations and excess (deficiency) of revenue over expenses reported in the statements of operations, excess (deficiency) of revenue over expenses reported in the statements of cash flows and current assets and unrestricted net assets reported in the statements 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, 2012, December 31, 2011 and January 1, 2011, and its results of operations, its changes in net assets and its cash flows for the years ended December 31, 2012 and December 31, 2011 in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Accountants, Licensed Public Accountants June 19, 2013 Toronto, Canada

4 Statements of Financial Position December 31, 2012, December 31, 2011 and January 1, 2011 Assets December 31, December 31, January 1, Current assets: Cash $ 9,073,453 $ 11,128,923 $ 11,356,109 Accounts receivable (note 4) 1,993,074 1,547,896 1,678,654 11,066,527 12,676,819 13,034,763 Long-term investments (note 3) 2,118,183 2,000,000 2,000,000 Liabilities and Net Assets $ 13,184,710 $ 14,676,819 $ 15,034,763 Current liabilities: Accrued liabilities $ 135,484 $ 105,312 $ 171,711 Funds committed for charitable donations (note 9) 3,744,875 4,455,924 4,848,275 3,880,359 4,561,236 5,019,986 Net assets: Unrestricted 4,986,181 4,989,940 4,899,407 Internally restricted (note 6) 2,325,702 2,131,661 2,025,772 Restricted 1,992,468 2,993,982 3,089,598 9,304,351 10,115,583 10,014,777 Commitments (note 9) $ 13,184,710 $ 14,676,819 $ 15,034,763 See accompanying notes to financial statements. On behalf of the Board: Director Director 1

5 Statements of Operations 2012 Unrestricted Restricted Total Revenue: Donations: National events and promotions, gross revenue (note 5) $ 2,473,364 $ $ 2,473,364 Corporate donation (note 2) 1,800,000 1,800,000 Other - regional income 445,968 8,557,644 9,003,612 4,719,332 8,557,644 13,276,976 Interest 78,767 78,767 4,798,099 8,557,644 13,355,743 Expenses: Charitable donations 2,145,000 10,985,945 13,130,945 Fundraising - national events (note 5) 326, ,168 Marketing 79,483 79,483 Administration 630, ,379 3,181,030 10,985,945 14,166,975 Excess (deficiency) of revenue over expenses $ 1,617,069 $ (2,428,301) $ (811,232) 2011 Unrestricted Restricted Total Revenue: Donations: National events and promotions, gross revenue (note 5) $ 2,541,253 $ $ 2,541,253 Corporate donation (note 2) 1,800,000 1,800,000 Other - regional income 491,588 8,292,040 8,783,628 4,832,841 8,292,040 13,124,881 Interest 120, ,396 4,953,237 8,292,040 13,245,277 Expenses: Charitable donations 1,731,680 10,550,811 12,282,491 Fundraising - national events (note 5) 315, ,047 Marketing 77,195 77,195 Administration 469, ,738 2,593,660 10,550,811 13,144,471 Excess (deficiency) of revenue over expenses $ 2,359,577 $ (2,258,771) $ 100,806 See accompanying notes to financial statements. 2

6 Statements of Changes in Net Assets Internally 2012 Unrestricted restricted Restricted Total (note 6) Net assets, beginning of year $ 4,989,940 $ 2,131,661 $ 2,993,982 $ 10,115,583 Excess (deficiency) of revenue over expenses 1,617,069 (2,428,301) (811,232) Interfund transfers (note 6) (1,620,828) 194,041 1,426,787 Net assets, end of year $ 4,986,181 $ 2,325,702 $ 1,992,468 $ 9,304,351 Internally 2011 Unrestricted restricted Restricted Total (note 6) Net assets, beginning of year $ 4,899,407 $ 2,025,772 $ 3,089,598 $ 10,014,777 Excess (deficiency) of revenue over expenses 2,359,577 (2,258,771) 100,806 Interfund transfers (note 6) (2,269,044) 105,889 2,163,155 Net assets, end of year $ 4,989,940 $ 2,131,661 $ 2,993,982 $ 10,115,583 See accompanying notes to financial statements. 3

7 Statements of Cash Flows Cash provided by (used in): Operating activities: Excess (deficiency) of revenue over expenses $ (811,232) $ 100,806 Change in non-cash operating working capital (1,126,055) (327,992) (1,937,287) (227,186) Investing activities: Net increase in long-term investments (118,183) Decrease in cash (2,055,470) (227,186) Cash, beginning of year 11,128,923 11,356,109 Cash, end of year $ 9,073,453 $ 11,128,923 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 kids across Canada live to their full potential. Our focus is to support children with disabilities and fight childhood hunger through our support of nutrition programs. 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. On January 1, 2012, the Organization adopted Canadian accounting standards for not-for-profit organizations in Part III of The Canadian Institute of Chartered Accountants' ("CICA") Handbook ("Not-For-Profit Standards"). These are the first financial statements prepared in accordance with Not-For-Profit Standards. In accordance with the transitional provisions in Not-For-Profit Standards, the Organization has adopted the changes retrospectively, subject to certain exemptions allowed under these standards. The transition date is January 1, 2011 and all comparative information provided has been presented by applying Not-For-Profit Standards. There were no adjustments to net assets as at January 1, 2011 or excess (deficiency) of revenue over expenditures for the year ended December 31, 2011 as a result of the transition to Not-For-Profit Standards. 5

9 Notes to Financial Statements (continued) 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 CICA 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. 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. 6

10 Notes to Financial Statements (continued) 1. Significant accounting policies (continued): (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. (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 dates of the financial statements and the reported amounts of revenue and expenses during the years. Actual results could differ from those estimates. 7

11 Notes to Financial Statements (continued) 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% (December 31, %, 2.0% and 2.5%; January 1, %, 2.0% and 2.5%), respectively. 4. Accounts receivable: Accounts receivable includes $1,606,482 (December 31, $1,201,376; January 1, $1,439,854) 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. The financial results of these events were as follows: 2012 Revenue Expenses Net National events: Bowlerama $ 1,062,108 $ 47,102 $ 1,015,006 Golf tournament 1,411, ,066 1,132,190 $ 2,473,364 $ 326,168 $ 2,147,196 8

12 Notes to Financial Statements (continued) 5. Donations (continued): 2011 Revenue Expenses Net National events: Bowlerama $ 1,150,856 $ 39,374 $ 1,111,482 Golf tournament 1,390, ,673 1,114,724 $ 2,541,253 $ 315,047 $ 2,226, 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, 2012 totalled $1,620,828 ( $2,269,044). Of the available funds, $1,426,787 ( $2,163,155) was transferred to offset regional restricted fund deficiencies. Interfund transfers are summarized as follows: Internally 2012 Unrestricted restricted Restricted National events allocation $ (1,266,800) $ 1,266,800 $ Other revenue allocated (354,028) 354,028 Offset regional restricted fund deficiencies (1,426,787) 1,426,787 $ (1,620,828) $ 194,041 $ 1,426,787 9

13 Notes to Financial Statements (continued) 6. Internally restricted funds (continued): Internally 2011 Unrestricted restricted Restricted National events allocation $ (1,269,044) $ 1,269,044 $ Other revenue allocated (1,000,000) 1,000,000 Offset regional restricted fund deficiencies (2,163,155) 2,163,155 $ (2,269,044) $ 105,889 $ 2,163, Regional results: The financial results by region are summarized as follows: 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 10

14 Notes to Financial Statements (continued) 7. Regional results (continued): 2012 National Ontario Western Québec Atlantic Total 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, National Ontario Western Québec Atlantic Total Revenue: National events, net $ 2,226,206 $ $ $ $ $ 2,226,206 Other 2,411,984 3,440,593 2,350,083 1,472,069 1,029,295 10,704,024 4,638,190 3,440,593 2,350,083 1,472,069 1,029,295 12,930,230 Expenses: Charitable donations 1,731,680 4,769,103 2,628,702 1,820,199 1,332,807 12,282,491 Other 546, ,933 2,278,613 4,769,103 2,628,702 1,820,199 1,332,807 12,829,424 Excess (deficiency) of revenue over expenses 2,359,577 (1,328,510) (278,619) (348,130) (303,512) 100,806 Interfund transfer (2,269,044) 1,344, , , ,100 90,533 15, ,667 (161,412) 100,806 Net assets, beginning of year 4,899, ,238 3,173,571 1,494,561 10,014,777 Net assets, end of year $ 4,989,940 $ 462,895 $ 3,173,932 $ 155,667 $ 1,333,149 $ 10,115, National Ontario Western Québec Atlantic Total Allocated as follows: Unrestricted $ 4,989,940 $ $ $ $ $ 4,989,940 Internally restricted 455, , , ,974 2,131,661 Restricted 7,240 2,448, ,175 2,993,982 $ 4,989,940 $ 462,895 $ 3,173,932 $ 155,667 $ 1,333,149 $ 10,115,583 11

15 Notes to Financial Statements (continued) 8. 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. 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 $2,800,000 for Breakfast for Learning in 2013 and $3,000,000 in 2014 ( $2,600,000 in 2012). 12