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ANNUAL REPORTThe United Church Health Services Society

2015 – 2016

Dr. Horace Wrinch, traveling on horseback to care for patients.

Photos courtesy of Alice Mynett (granddaughter of Dr. Horace Wrinch)

The United Church Health Services Society

Annual Report2015 – 2016

Table of ContentsGuiding Principles 3

Report from the Board Chair 4 Rev. Michael Hare

Report from the Chief Executive Officer 5 Mary Jean Morrison

Report from Medical Director 7 Dr Peter Newbery

Members of our Board 9

Consolidated Financial Statements 10

© 2016 by The United Church Health Services Society. All rights reserved.This book may not be reproduced, in whole or in part in any form

without the prior written permission of the UCHSS.

Coordination: Southcott Communications

Printed and bound in British Columbia, Canada.

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Guiding Principles of the UCHSSMissionInspired by the healing ministry of Jesus Christ, we are dedicated to serve and to support one another in the promotion of better health and health care for individuals and the communities in which we live and serve.

VisionHealthy people in healthy communities; where wellness is a resource for daily living and an inte-gral part of individual, family and community life; and where health services, including respect for traditional medicines and cultural values, are an integral part of the social, spiritual and economic development of the community.

ValuesThe Society is a United Church of Canada health care community that respects the sacredness of all aspects of life and believes that health begins in our relationship with God and involves an active concern for our neighbors and community. Within this framework, our values are:

Health & well-beingWe appreciate that individuals and communi-ties have spiritual, physical, social and emotional dimensions, which must be in harmony for whole-ness expressed in the word “health.” Health is em-bodied in the concept of wholeness, an integrated, full and creative functioning of mind, body and spirit.

RespectWe respect the diversity, dignity and interde-pendence of all persons – the core to our mission of an integrated approach to health and health care, nurturing human dignity and strengthening spiritual resources and individual and community involvement.

IntegrityWe found our relationships on honesty, justice and fairness. We advocate for public policies that promote health for all and intentionally integrate the social, economic, cultural and environmental determinants of well-being and health.

TrustWe behave in ways that generate trust and build confidence. We believe that God intends wholeness for all people, and that our role is to promote and enable individual and community wholeness.

SpiritualityWe nurture the God-given creativity, love and compassion that dwells within us all. In accordance with our Christian values we care for one another and express our oneness with each other regardless of race, creed or background.

StewardshipWe share accountability for the well-being of our communities and advocate for public poli-cy and programs to enhance health of individuals, families and communities.

ExcellenceWe strive for excellence through learning and continuous improvement.

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It is said that life is full of changes. This past year for Unit-ed Church Health Ser-vices Society(UCHSS) has been one of major change.

In last year’s annual report we reported that we had engaged in a strategic planning process with community stakeholders, among others, to help determine the future direction of Wrinch Memorial Hospital and health care in the Hazeltons and the surrounding area. As a result of that process - as well as the self-examination as part of the renewal of our accreditation - the Board came to the conclusion, that for a number of reasons, including financial viability, the time had come to transfer Wrinch Memorial Hospital and associated clinics to the Northern Health Authority.

Accordingly in September 2015, the Board entered into discussions with Northern Health Authority to negotiate this transfer. On April 1, 2016 the Northern Health Authority took over responsibility for Wrinch Memorial Hospital, as well as the medical and dental clinics. A number of Outreach programmes transferred to the Wrinch Memorial Foundation. UCHSS has retained responsibility for the Pharmacy, which we hope to sell in the near future.

With this transfer, the United Church leaves the provision of hospital care in rural and aboriginal communities in northern BC after 115 years of service. We leave a rich legacy in which we have attempted to integrate spiritual care with healing of the body. We have been advocates for

the development of family practice as a medical specialty. We have been pioneers in using hospitals in isolated communities in the training of doctors, nurses and other medical personnel. We leave proud of the work that we have done.

The constant over the years has been the dedication of our staff, under sometimes challenging conditions, to providing exemplary care. This year, our staff under the leadership of our Chief Executive Officer, Mary Jean Morrison, continued to provide compassionate, quality care to patients and their families - in the middle of accreditation visits and preparations for the transfer to Northern Health. Because of the efforts of our staff, our accreditation was renewed and the transfer to Northern Health will be seamless. We thank them for their energy and commitment.

We also thank the members of the Wrinch Memorial Hospital Advisory Board for their energy and time spent in advocacy for health care in the Hazeltons. In addition, thanks are due to the members of the Board of Governors of UCHSS for their faithful service as we continued to provide quality care while at the same time attending to the negotiations relating to the transfer.

In the year ahead, the Society will have to consider along with B.C. Conference of the United Church what will be the future of the Society and what legacy we will leave for those who come after us.

Rev. Michael Hare, Board Chair

Message from the Board ChairREV. MICHAEL HARE, UCHSS Board Chair

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CEO Annual ReportMARY JEAN MORRISON, Chief Executive Officer

It has been a pivotal year for the United Church Health Services as we took the first steps in September 2015 towards the transfer of Wrinch Memorial Hospital, the medical clinic and den-tal clinic to Northern Health.

We conducted extensive consultations with the staff, community and health care partners during the stra-tegic planning process. Building on this feedback and the successful Accreditation Survey that identified the need for a strategic decision, the UCHSS Board approached Northern Health with the recommenda-tion that the affiliation agreement be ended March 31, 2016 and transfer take place April 1, 2016.

The strong partnership with Northern Health in the past gave the UCHSS Board and staff confidence that the transfer would be a positive move for the long term sustainability of health care in the region.

There have been some poignant moments as we re-flected on the 115 years of service starting with the Methodist Church and continuing with The United Church of Canada and UCHSS to the present day.

It was a journey that began in 1900 with Dr. Horace Wrinch and his wife Alice travelling from Ontario to Kispiox to live in their two room cabin, the front room for seeing patients and the second room their living quarters.

It was quite a health care journey from this humble

cabin to a campus of care in Hazelton with a hospital, primary care medical clinic, dental clinic, pharmacy, community health, mental health and addictions, child and youth services, diabetes care, prenatal and post natal care, toddler care, palliative care, staff and physician housing. Partners on the campus in-cluded Northern Health, Health Canada, Hazelton Community Services, B.C. Emergency Health Ser-vices, the Wrinch Foundation, Skeena Place Assisted Living, the volunteer fundraising Thrift Shop, and Mountain View United Church. Everything is locat-ed on the same land that once housed the original hospital, Dr. Wrinch’s house and the farm to support the hospital and its patients.

It has been the opportunity to locate services on this campus and the commitment to integrated, holis-tic and quality care that will provide a platform for Northern Health to build on the legacy of the United Church Health Services.

The thread through these 115 years is the commit-ment to compassionate and quality care. It is the knowledge, skill and caring of the staff, physicians and volunteers working in partnership with pa-tients, families and communities to improve care and health outcomes that is the heart of the services.

Currently, the Pharmacy is still under the jurisdic-tion of UCHSS. We hope to sell it soon. I’d like to thank the pharmacists, technicians and allied staff for their caring and professionalism in their work.

Special events on March 29 and 30, 2016 marked the transition. A gathering in Hazelton recognized and honoured the current and retired staff, phy-sicians, volunteers, Wrinch Advisory Board and

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UCHSS Board members and the “Wrinch Extended Family” of partners. It was a real pleasure to have so many former staff members, now long retired, join us. This event also demonstrated the dramatic skills of two well know physicians, Dr. Peter Newbery and Dr. Phil Muir. There was a special “television pro-duction” where Peter Mansbery interviewed Dr. Wrinch in 1904 on the “Future of Health Care in the Hazeltons”.

We all enjoyed the historical picture display orga-nized by Peggy Muir and the opportunity to hear stories of the past from the staff. The Rev. Keith Simmons, President BC Conference of The United Church of Canada, The Rev. Doug Goodwin, Exec-utive Secretary, BC Conference, The Rev. Michael Hare UCHSS Board Chair, The Rev. Wendy Bily, Eve-lyn Kennedy, John Olson and Peggy Muir from the UCHSS Board, and Alf Brady, Chair of the Wrinch Memorial Advisory Board joined us to say farewell and to celebrate over a 115 years of health services in Hazelton and the Upper Skeena. Northern Health was represented by Penny Anguish, Cormac Hikisch and Andrea Scarth.

We also had the opportunity to recognize our strong partnership with Northern Health, the leadership of Dr. Charles Jaco, Board Chair, Cathy Ulrich CEO, Penny Anguish, COO North West and Chief Nurse Executive Professional Practice, Mark De Croos VP Finance, David Williams, Human Resources, Steve Raper Communications and the contribution of all members of the Northern Health management team to making the transfer scheduled for April 1, 2016 a seamless process. Penny Anguish was on site for many visits prior to the transfer events and she is to be commended for her thoughtful and sensitive approach to recognizing to the emotional impact of the transfer on staff and physicians and providing a warm welcome to Northern Health.

The transfer planning and the due diligence process with the UCHSS Board, senior UCHSS staff and the

Northern Health transition team was a demanding and interesting experience. We worked through the innumerable details with precision, good faith and good humour. I want to express my gratitude to the UCHSS Board Transfer Committee, The Rev. Michael Hare, Mark Powell, The Rev. Maggie Watts-Ham-mond and Peggy Muir for their strategic leadership and the UCHSS staff transition team for their dedi-cated work on the due diligence process.

There were many staff that were so helpful in the change process, thank you! In particular, I want to recognize the leadership and contribution to the due diligence transfer process of Dr. Peter New-bery, Mary Sawan Vanstone, Mary Houlden, Selena Stoeppler, Shirley Webb, and Yvonne DeBoer. Diane Matheson came out of retirement to help with the due diligence process and to work with Andy Naylor to assist in the housing transfer and environmental work preparation

All but one of United Church of Canada (UCC) mis-sion hospitals has been transferred to government administration. As of April 2016, Lamont Health Care Centre in Lamont, Alberta continues to provide health care.

The earliest doctors and nurses came to Hazelton to deliver care and that tradition has continued today in a practice based in hard work, professionalism, and genuine care. Through it all, to today and be-yond, this mission has been blessed with remarkable staff, volunteers and boards, committed to patient care and responsive to the people who live in the communities. I have also been blessed to be part of the team.

Mary Jean Morrison

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The United Church Health Services SocietySite Medical Director Reports to the Board

Site Medical Directors Reports

It is hard to believe that this will be my last report to the United Church Health Services Society board.

I want to thank you all for your very significant service to UCHSS, and your support for this agency which has had

such a remarkable track record in the delivery of health care to rural and isolated communities.

In that respect it may be worthwhile to remind you as board of things that UCHSS and its predecessors has achieved over the years.

A Quick ListSince the late 1800s we’ve been providing health ser-vices to rural and isolated communities across Can-ada. Because of the way in which our service devel-oped, and our interest in serving those communities that were underserved, our focus has never been on urban communities but on those most remote and isolated. The pioneers in our service, doctors such as Horace Wrinch, RW Large, George Darby, Don Watt, Ted Whiting, Phil Muir, Ray McIlwain and others made amazing contributions to the isolated commu-nities they served. They set the bar high.

In fact the Hazleton Hospital, in an early process of accreditation in the mid-1930s, was designated as one of the 10 best hospitals in North America.

Our services in Lamont, Alberta, and in Hazelton pi-oneered medical care by subscription, where families would pay relatively small sums of money to receive medical care for their families year-round.

We were early teachers of medicine, accepting sum-mer students, and later students taking elective pe-riods during their medical training, and later still family practice residents for significant portions of their post-graduate training.

In British Columbia, we were early-on selected as a pioneer practice to develop distributed medical training, a concept which has caught on worldwide.

We were instrumental in helping to conceive, devel-op, and support the Northern Medical Program at the University of Northern British Columbia, which has grown into a distributed program with sites now not only in Prince George, but also on Vancouver Is-land, the Fraser Valley, and Kelowna.

We maintained obstetrics, supporting GP anaesthe-sia and GP surgery to best support the communities we were serving. At a time when obstetrics, sadly, was being removed from rural hospitals, ours have been among the very last to give up this essential service, and this only because we could not find phy-sicians to continue the service.

In each individual community, we have worked at de-veloping community-focused services, again to best serve the community. For instance, for many years we held clinics in distant sites like Anaheim Lake out of Bella Coola; Klemtu, out of Bella Bella; Gitanyow,

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Gitwangak and Gitsegukla out of Hazelton, recog-nizing that access to medical services from these isolated communities was very difficult. We brought the service to them.

In Hazelton, very creative work has been done in the areas of addictions and rehabilitation, mental health (we collaborated with the Canadian Mental Health Association to develop and fund counseling services,) and started Starting Smart, Little Flowers, the Wrinch Foundation, and several other services.

We pioneered a range of services for physicians, in-cluding a rural locum service; Health Match BC a re-cruitment service for physicians and nurses and oth-er health professionals; advanced skills development programs, particularly with UBC but having provid-ed support other advanced medical skills training programs.

UCHSS has provided national physician leadership. As an example, five of the presidents of the Col-lege of Family Physicians of Canada have been staff members of UCHSS, and numerous other presidents have been at one time or another locum physicians with us. Several have been program directors for postgraduate training in family medicine, others have been chairs of departments of family medicine.

Our physicians have been elected as Family Physi-cian of the Year. Two physicians who have worked with us have been named to the Order of Canada and two to the Order of BC.

In short, the influence of UCHSS and its predeces-sors has been remarkable. Thanks for your role in supporting this creative, and formative service.

As for our present issues – the transfer of our service is on track to be completed on March 31st.

We have been satisfactorily staffed in Hazelton for physicians, thanks to finally getting recognition for

support from the rural locum service of BC. Though not up to full staff we have managed. We had only just interviewed an Irish physician interested in coming to Hazelton when we learned that two Ca-nadian grads were ready to sign on, and would bring with them two others. At the same time a senior Canadian physician, whom we had been interested in attracting to Hazelton, called from his holiday in Southeast Asia to say he and his family were pre-pared to join us. All these folks will be available to us in August.

Our staffing seems to be in order for the future, at least as far as physicians is concerned.

Our relationship with NHA continues to be strong on the front lines and I anticipate a smooth transi-tion and continuing strength in NHA’s support of the Upper Skeena.

We will continue to work with NHA and FNHA in the weeks ahead to establish Nurse Practitioner services in the villages near Hazelton in order to increase ac-cess to necessary medical treatments.

Finally I want to thank MaryJean Morrison for her service to us. No one has worked more diligently or with more dedication to keep this vital work going, and to see a smooth transition through to effective completion. We are very grateful to her.

It has been a great privilege to work with the UCHSS board, and with the church, our physicians, nurses, administrators and others over a period of 28 years [ 38 if you count my years in clinical practice]. Thanks again for all you have done for UCHSS and for our communities.

Peter Newbery, MDiv., MD, Medical Director, UCHSS

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Board and Council Members

UCHSS BoardThe Rev. Michael Hare • ChairEvelyn Kennedy • Vice Chair The Rev. Maggie Watts-HammondMark PowellPeggy MuirJohn OlsonThe Rev. Wendy Bily

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THE UNITED CHURCH HEALTH SERVICES SOCIETY

Index to Consolidated Financial Statements

Year Ended March 31, 2016

Page AUDITORS' REPORT 11

FINANCIAL STATEMENTS

Management's Responsibility for Financial Reporting 13

Consolidated Statement of Financial Position 14

Consolidated Statement of Operations 15

Consolidated Statement of Change in Net Financial Assets (Debt) 16

Consolidated Statement of Cash Flows 17

Notes to Consolidated Financial Statements 18 - 32

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Index to Consolidated Financial Statements


Page AUDITORS' REPORT 11

FINANCIAL STATEMENTS

Management's Responsibility for Financial Reporting 13

Consolidated Statement of Financial Position 14

Consolidated Statement of Operations 15

Consolidated Statement of Change in Net Financial Assets (Debt) 16

Consolidated Statement of Cash Flows 17

Notes to Consolidated Financial Statements 18 - 32

PASSIONINTEGRITYEXCELLENCE

Offices located in Vancouver, South Surrey and Prince Rupert, BC

Suite 1010 – 777 Hornby StreetVancouver, BC V6Z 1S4

Phone: (604) 251-1535Fax: (604) 541-9845Toll Free Phone: (800) 281-5214Toll Free Fax: (866) 691-6929Email: [email protected]

www.vohora.ca Vohora LLPCPAs & Business Advisors

INDEPENDENT AUDITOR'S REPORT

To the Board of Governors of The United Church Health Services Society

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of The United Church Health ServicesSociety, which comprise the consolidated statement of financial position as at March 31, 2016, and the consolidatedstatements of operations and accumulated operating surplus, change in net financial debt and cash flows for the yearthen ended, and a summary of significant accounting policies and other explanatory information. These financialstatements have been prepared by management of the Society based on the financial reporting requirements BCRegulation 198/2011 of the Budget Transparency and Accountability Act of British Columbia (the "requirements").

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with Canadian public sector accounting standards, and for such internal control as managementdetermines is necessary to enable the preparation of consolidated financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. Weconducted our audit in accordance with Canadian generally accepted auditing standards. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in theconsolidated financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation andfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the consolidatedfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.











































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Vohora LLPCPAs & Business Advisors

INDEPENDENT AUDITOR'S REPORT (continued)

Basis for Qualified OpinionIn common with many charitable organizations, the Society derives revenue from donations, the completeness ofwhich is not susceptible of satisfactory audit verification. Accordingly, our verification of this revenue was limitedto the amounts recorded in the records of the Society and we were not able to determine whether any adjustmentsmight be necessary to other revenue, annual operating deficit, financial assets and accumulated operating surplus.

Opinion

In our opinion, except for the effect of adjustments, if any, which we might have determined to be necessary had webeen able to satisfy ourselves concerning the completeness of the donations referred to in the preceding paragraph,the consolidated financial statements present fairly, in all material respects, the consolidated financial position ofThe United Church Health Services Society as at March 31, 2016 and March 31, 2015 and its consolidated operatingresults and consolidated cash flows for the years then ended in accordance with Canadian public sector accountingstandards and the requirements.

Emphasis of MatterWithout modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis ofaccounting used in the preparation of these financial statements and the significant difference between the basis ofaccounting and Canadian Public Sector Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by the Society Act of British Columbia, we report that in our opinion, these principles have been appliedon a basis consistent with that of the preceding year.

Vancouver, BCJune 29, 2016

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Vohora LLPCPAs & Business Advisors

INDEPENDENT AUDITOR'S REPORT (continued)

Basis for Qualified OpinionIn common with many charitable organizations, the Society derives revenue from donations, the completeness ofwhich is not susceptible of satisfactory audit verification. Accordingly, our verification of this revenue was limitedto the amounts recorded in the records of the Society and we were not able to determine whether any adjustmentsmight be necessary to other revenue, annual operating deficit, financial assets and accumulated operating surplus.

Opinion

In our opinion, except for the effect of adjustments, if any, which we might have determined to be necessary had webeen able to satisfy ourselves concerning the completeness of the donations referred to in the preceding paragraph,the consolidated financial statements present fairly, in all material respects, the consolidated financial position ofThe United Church Health Services Society as at March 31, 2016 and March 31, 2015 and its consolidated operatingresults and consolidated cash flows for the years then ended in accordance with Canadian public sector accountingstandards and the requirements.

Emphasis of MatterWithout modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis ofaccounting used in the preparation of these financial statements and the significant difference between the basis ofaccounting and Canadian Public Sector Accounting Standards.

Report on Other Legal and Regulatory RequirementsAs required by the Society Act of British Columbia, we report that in our opinion, these principles have been appliedon a basis consistent with that of the preceding year.

Vancouver, BCJune 29, 2016

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Consolidated Statement of Operations

For the Year ended March 31, 2016 with comparative figures for 2015

$

NoteBudget(note 2) 2016 2015

Revenues

Ministry of Health contributions 8,428,267 8,489,954 8,037,161

Pharmacy revenue 2,015,000 2,464,238 2,211,050

Dental revenue 1,100,000 1,074,667 1,034,712

Amortization of deferred capital contributions 379,834 369,476 412,402

Medical Services Plan 423,766 370,373 492,170

Patients, clients and residents 224,169 301,139 221,760

Other revenue 365,807 430,142 402,414

Gains and income from marketable securities 2,000 13,029 256,325

12,938,231 13,513,016 13,067,995

Expenses 11

Acute 11,092,594 12,090,290 11,560,744

Corporate 899,248 1,179,158 943,030

Community Care 425,904 185,574 194,039

Population health & wellness 57,875 84,380 71,753

Residential care 501,983 497,350 481,709

12,977,604 14,036,752 13,251,275

Annual operating deficit before other items (38,761) (523,736) (183,279)

Other itemsGain (loss) from termination of agreement with Health Authority 12 (8,681) 982,660

Annual operating surplus (deficit) (38,761) (532,417) 799,381

Accumulated operating surplus, beginning of the year 1,913,839 1,913,839 1,114,458

Accumulated operating surplus, end of year 1,875,078 1,381,422 1,913,839

The accompanying notes and supplementary schedules are an integral part of these financial statements.

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Consolidated Statement of Operations


$

NoteBudget(note 2) 2016 2015

Revenues

Ministry of Health contributions 8,428,267 8,489,954 8,037,161

Pharmacy revenue 2,015,000 2,464,238 2,211,050

Dental revenue 1,100,000 1,074,667 1,034,712

Amortization of deferred capital contributions 379,834 369,476 412,402

Medical Services Plan 423,766 370,373 492,170

Patients, clients and residents 224,169 301,139 221,760

Other revenue 365,807 430,142 402,414

Gains and income from marketable securities 2,000 13,029 256,325

12,938,231 13,513,016 13,067,995

Expenses 11

Acute 11,092,594 12,090,290 11,560,744

Corporate 899,248 1,179,158 943,030

Community Care 425,904 185,574 194,039

Population health & wellness 57,875 84,380 71,753

Residential care 501,983 497,350 481,709

12,977,604 14,036,752 13,251,275

Annual operating deficit before other items (38,761) (523,736) (183,279)

Other itemsGain (loss) from termination of agreement with Health Authority 12 (8,681) 982,660

Annual operating surplus (deficit) (38,761) (532,417) 799,381

Accumulated operating surplus, beginning of the year 1,913,839 1,913,839 1,114,458

Accumulated operating surplus, end of year 1,875,078 1,381,422 1,913,839


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16


Consolidated Statement of Change in Net Financial Debt


$

Note 2016 2015

Annual operating surplus (deficit) (532,417) 799,381

Acquisition of tangible capital assets (985,443) (773,535)Amortization of tangible capital assets 438,151 484,799Loss on disposal of tangible capital assets 14,000 -Transfer of assets - 3,573,108

(1,065,709) 4,083,753

Acquisition of prepaid expenses 5,602 (141,952)Consumption of inventories held for use 15,980 391,391Use of prepaid expenses 54,443 94,273

76,025 343,712

Decrease (increase) in net financial debt (989,684) 4,427,465Net financial debt at beginning of year (926,825) (5,354,290)Net financial debt at end of year (1,916,509) (926,825)


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Consolidated Statement of Cash Flows


$

Note 2016 2015

Cash flows from (used in) operating activitiesAnnual surplus (deficit) (532,417) 799,381Items not involving cash

- Amortization of deferred capital contributions (369,476) (412,586)- Amortization of tangible capital assets 438,151 484,799- Loss on disposal of tangible assets 14,000 -- Realized loss (gain) on marketable securities (72,085) (177,290)- Unrealized gain on marketable securities 109,437 (18,462)

(412,390) 674,842Net change in non-cash working capital 13 451,937 296,459Net change in cash from operating activities 39,547 972,301

Capital activities- Acquisition of tangible capital assets (985,443) (773,535)- Proceeds on disposal of tangible capital assets - 3,479,746- Proceeds on sale of marketable securities 505,422 528,759

Net change in cash from capital activities (480,021) 3,234,970

Financing transactions- Capital contributions 473,449 (5,725,704)- Reclassification of funds received - (26,451)- Contribution refund to Northern Health Authority (134,961) -

Net change in cash from financing activities 338,488 (5,752,155)

Increase (decrease) in cash and cash equivalents (101,986) (1,544,879)Cash and cash equivalents at beginning of year 570,827 2,115,706Cash and cash equivalents at end of year 468,841 570,827


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17


Consolidated Statement of Change in Net Financial Debt


$

Note 2016 2015

Annual operating surplus (deficit) (532,417) 799,381

Acquisition of tangible capital assets (985,443) (773,535)Amortization of tangible capital assets 438,151 484,799Loss on disposal of tangible capital assets 14,000 -Transfer of assets - 3,573,108

(1,065,709) 4,083,753

Acquisition of prepaid expenses 5,602 (141,952)Consumption of inventories held for use 15,980 391,391Use of prepaid expenses 54,443 94,273

76,025 343,712

Decrease (increase) in net financial debt (989,684) 4,427,465Net financial debt at beginning of year (926,825) (5,354,290)Net financial debt at end of year (1,916,509) (926,825)


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Consolidated Statement of Cash Flows


$

Note 2016 2015

Cash flows from (used in) operating activitiesAnnual surplus (deficit) (532,417) 799,381Items not involving cash

- Amortization of deferred capital contributions (369,476) (412,586)- Amortization of tangible capital assets 438,151 484,799- Loss on disposal of tangible assets 14,000 -- Realized loss (gain) on marketable securities (72,085) (177,290)- Unrealized gain on marketable securities 109,437 (18,462)

(412,390) 674,842Net change in non-cash working capital 13 451,937 296,459Net change in cash from operating activities 39,547 972,301

Capital activities- Acquisition of tangible capital assets (985,443) (773,535)- Proceeds on disposal of tangible capital assets - 3,479,746- Proceeds on sale of marketable securities 505,422 528,759

Net change in cash from capital activities (480,021) 3,234,970

Financing transactions- Capital contributions 473,449 (5,725,704)- Reclassification of funds received - (26,451)- Contribution refund to Northern Health Authority (134,961) -

Net change in cash from financing activities 338,488 (5,752,155)

Increase (decrease) in cash and cash equivalents (101,986) (1,544,879)Cash and cash equivalents at beginning of year 570,827 2,115,706Cash and cash equivalents at end of year 468,841 570,827


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18


Notes to Consolidated Financial Statements


1. PURPOSE AND CONTINUANCE OF SOCIETY

The United Church Health Services Society ("Society") was incorporated under the Province of BritishColumbia Society Act on March 31, 2008 by The United Church of Canada to assume the responsibilities ofowning, operating and managing the hospitals and clinics formerly operated by the church itself through itsConference in British Columbia. It became a registered charity on February 10, 2009 and as a result it is notsubject to Federal or Provincial Income or Capital Taxes under S.149(1)(f) of the Income Tax Act (Canada).

The Society administers a hospital, medical clinic, dental clinic, pharmacy and programs on the WrinchMemorial Hospital campus in the Village of Hazelton.

The Society is funded by the Ministry of Health Services ("Ministry") and maintains a strategic alliance throughthe Northern Health Authority ("Health Authority") through an affiliation agreement. The affiliation agreementestablishes operating provisions, accountability, funding arrangements and termination rights between theSociety and the Health Authority. Under this agreement, the Society retains all surpluses reported from itsoperations to be used to fund any service or project that benefits the residents of the community it services.Operating and capital deficits incurred by the Society in its operations are not taken as those of the HealthAuthority but are the responsibility of the Society. Subsequent to the year, the affiliation agreement with theHealth Authority has been terminated; please refer to note 12 for more details.

The Society is dependent upon the Ministry and the Health Authority to provide sufficient funding to continueoperations, to replace equipment and to complete other capital projects. However, since the Society owns thepharmacy, which is profitable, and holds a sufficient amount of cash and investments, it is able to continue tooperate without the funding from the Ministry. As a result these financial statements have been preparedassuming that the Society will continue on a going concern basis.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

These financial statements have been prepared in accordance with Section 23.1 of the Budget Transparencyand Accountability Act of the Province of British Columbia supplemented by Regulations 257/2010 and198/2011 issued by the Province of British Columbia Treasury Board (referred to as the financial reportingframework ("the framework")).

(continues)

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Budget Transparency and Accountability Act requires that the financial statements be prepared inaccordance with the set of standards and guidelines that comprise generally accepted accounting principles forsenior governments in Canada, or if the Treasury Board makes a regulation, the set of standards and guidelinesthat comprise generally accepted accounting principles for senior governments in Canada as modified by thealternate standard or guideline or part thereof adopted in the regulation.

Regulation 257/2010 requires all taxpayer-supported organizations in the Schools, Universities, Colleges andHospitals sectors to adopt Canadian public sector accounting standards (“PSAS”) issued by the CharteredProfessional Accountants of Canada (“CPAC”) Public Sector Accounting Board (“PSAB”) without any CPACHandbook – PSAS (“PS”) 4200 series from their first fiscal year commencing after January 1, 2012.

Regulation 198/2011 requires that restricted contributions received or receivable are to be reported as revenuedepending on the nature of the restrictions on the use of the funds by the contributors as follows:

(i) Contributions for the purpose of acquiring or developing a depreciable tangible capital asset orcontributions in the form of a depreciable tangible capital asset are recorded, and referred to as deferredcapital contributions and recognized in revenue at the same rate that amortization of the related tangiblecapital asset is recorded. The reduction of the deferred capital contributions and the recognition of therevenue are accounted for in the fiscal periods during which the tangible capital asset is used to provideservices.

If the depreciable tangible capital asset funded by a deferred capital contribution is written down, a proportionate share of the deferred capital contribution is recognized as revenue during the same period.

(ii) Contributions restricted for specific purposes other than those for the acquisition or development of adepreciable tangible capital asset are recorded as deferred contributions and recognized in revenue in theyear in which the stipulation or restriction on the contributions have been met.

For British Columbia taxpayer-supported organizations, these contributions include government transfers andexternally restricted contributions.

The accounting policy requirements under Regulation 198/2011 are significantly different from therequirements of Canadian PSAS which requires that:

(i) Government transfers, which do not contain a stipulation that creates a liability, be recognized asrevenue by the recipient when approved by the transferor and the eligibility criteria have been met inaccordance with PS3410; and

(ii) Externally restricted contributions be recognized as revenue in the period which the resources are usedfor the purpose or purposes specified in accordance with PS 3100.

As a result, revenue recognized in the Statement of Operations and certain related deferred capital contributionswould be recorded differently under PSAS.

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1. PURPOSE AND CONTINUANCE OF SOCIETY

The United Church Health Services Society ("Society") was incorporated under the Province of BritishColumbia Society Act on March 31, 2008 by The United Church of Canada to assume the responsibilities ofowning, operating and managing the hospitals and clinics formerly operated by the church itself through itsConference in British Columbia. It became a registered charity on February 10, 2009 and as a result it is notsubject to Federal or Provincial Income or Capital Taxes under S.149(1)(f) of the Income Tax Act (Canada).

The Society administers a hospital, medical clinic, dental clinic, pharmacy and programs on the WrinchMemorial Hospital campus in the Village of Hazelton.

The Society is funded by the Ministry of Health Services ("Ministry") and maintains a strategic alliance throughthe Northern Health Authority ("Health Authority") through an affiliation agreement. The affiliation agreementestablishes operating provisions, accountability, funding arrangements and termination rights between theSociety and the Health Authority. Under this agreement, the Society retains all surpluses reported from itsoperations to be used to fund any service or project that benefits the residents of the community it services.Operating and capital deficits incurred by the Society in its operations are not taken as those of the HealthAuthority but are the responsibility of the Society. Subsequent to the year, the affiliation agreement with theHealth Authority has been terminated; please refer to note 12 for more details.

The Society is dependent upon the Ministry and the Health Authority to provide sufficient funding to continueoperations, to replace equipment and to complete other capital projects. However, since the Society owns thepharmacy, which is profitable, and holds a sufficient amount of cash and investments, it is able to continue tooperate without the funding from the Ministry. As a result these financial statements have been preparedassuming that the Society will continue on a going concern basis.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

These financial statements have been prepared in accordance with Section 23.1 of the Budget Transparencyand Accountability Act of the Province of British Columbia supplemented by Regulations 257/2010 and198/2011 issued by the Province of British Columbia Treasury Board (referred to as the financial reportingframework ("the framework")).

(continues)

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The Budget Transparency and Accountability Act requires that the financial statements be prepared inaccordance with the set of standards and guidelines that comprise generally accepted accounting principles forsenior governments in Canada, or if the Treasury Board makes a regulation, the set of standards and guidelinesthat comprise generally accepted accounting principles for senior governments in Canada as modified by thealternate standard or guideline or part thereof adopted in the regulation.

Regulation 257/2010 requires all taxpayer-supported organizations in the Schools, Universities, Colleges andHospitals sectors to adopt Canadian public sector accounting standards (“PSAS”) issued by the CharteredProfessional Accountants of Canada (“CPAC”) Public Sector Accounting Board (“PSAB”) without any CPACHandbook – PSAS (“PS”) 4200 series from their first fiscal year commencing after January 1, 2012.

Regulation 198/2011 requires that restricted contributions received or receivable are to be reported as revenuedepending on the nature of the restrictions on the use of the funds by the contributors as follows:

(i) Contributions for the purpose of acquiring or developing a depreciable tangible capital asset orcontributions in the form of a depreciable tangible capital asset are recorded, and referred to as deferredcapital contributions and recognized in revenue at the same rate that amortization of the related tangiblecapital asset is recorded. The reduction of the deferred capital contributions and the recognition of therevenue are accounted for in the fiscal periods during which the tangible capital asset is used to provideservices.

If the depreciable tangible capital asset funded by a deferred capital contribution is written down, a proportionate share of the deferred capital contribution is recognized as revenue during the same period.

(ii) Contributions restricted for specific purposes other than those for the acquisition or development of adepreciable tangible capital asset are recorded as deferred contributions and recognized in revenue in theyear in which the stipulation or restriction on the contributions have been met.

For British Columbia taxpayer-supported organizations, these contributions include government transfers andexternally restricted contributions.

The accounting policy requirements under Regulation 198/2011 are significantly different from therequirements of Canadian PSAS which requires that:

(i) Government transfers, which do not contain a stipulation that creates a liability, be recognized asrevenue by the recipient when approved by the transferor and the eligibility criteria have been met inaccordance with PS3410; and

(ii) Externally restricted contributions be recognized as revenue in the period which the resources are usedfor the purpose or purposes specified in accordance with PS 3100.

As a result, revenue recognized in the Statement of Operations and certain related deferred capital contributionswould be recorded differently under PSAS.

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Basis of consolidation

The consolidated financial statements include the assets and liabilities and results of operations of the Societyand Wrinch Memorial Hospital.

Revenue recognition

Under the Hospital Insurance Act and Regulations thereto, the Society is funded primarily by the Province ofBritish Columbia in accordance with budget arrangements established and approved by the Ministry and theHealth Authorities. Approved operating contributions are provided to the Society by the Ministry through theHealth Authorities.

Revenues are recognized on an accrual basis in the period in which the transactions or events occurred thatgave rise to the revenues, the amounts are considered to be collectible and can be reasonably estimated.

Revenues related to fees or services received in advance of the fees being earned or the service beingperformed are deferred and recognized when the fees are earned or service performed.

Externally restricted contributions are recognized as revenue depending on the nature of the restrictions on theuse of the funds by the contributors as described in the Basis of accounting note above.

Volunteers contribute a significant amount of their time each year to assist the Society in carrying out itsprograms and services. Because of the difficulty of determining their fair value, contributed services are notrecognized in these financial statements.

Contributions of assets, supplies and services that would otherwise have been purchased are recorded at fairvalue at the date of contribution, provided a fair value can be reasonably determined.

Pharmacy revenue, dental clinic revenue, medical clinic revenue and other revenue are recognized when thesales occur and/or when the services have been performed and collection is reasonably assured.

Rental revenue is recognized in the period in which it is earned.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits and short-term highly liquid investments thatare readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value.These short-term investments generally have a maturity of three months or less at acquisition and are held forthe purpose of meeting short-term cash commitments rather than for investing.

(continues)

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Prepaid expenses

Prepaid expenses include cash disbursements for future events, and operational costs, which will be charged toexpense over the periods expected to benefit from it.

Non-financial assets

(i) Tangible capital assets:

Tangible capital assets are recorded at cost, which includes amounts that are directly attributable toacquisition, construction, development or betterment of the asset. Costs include overhead directlyattributable to construction and development. Interest is capitalized over the development period wheneverexternal debt is issued to finance the construction and development of tangible capital assets.

The cost, less residual value, of the tangible capital assets, excluding land, is amortized on a straight linebasis over their estimated useful lives as follows:

Land non-amortizableLand improvements 5 - 25 years straight-line methodBuildings and trailers 10 - 50 years straight-line methodEquipment 3 - 25 years straight-line method

Assets under construction or development are not amortized until the asset is available for productive use.

Tangible capital assets are written down when conditions indicate that they no longer contribute to theSociety’s ability to provide services, or when the value of future economic benefits associated with thetangible capital assets are less than their net book value. The write-downs of tangible capital assets arerecorded in the statement of operations. Write-downs are not subsequently reversed.

Contributed tangible capital assets are recorded at their fair value on the date of contribution. When fairvalue of a contributed asset cannot be reliably determined, the asset is recorded at nominal value.

(ii) Inventories held for use:

Inventories held for use are recorded at the lower of weighted average cost and replacement cost.

(continues)

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Basis of consolidation

The consolidated financial statements include the assets and liabilities and results of operations of the Societyand Wrinch Memorial Hospital.

Revenue recognition

Under the Hospital Insurance Act and Regulations thereto, the Society is funded primarily by the Province ofBritish Columbia in accordance with budget arrangements established and approved by the Ministry and theHealth Authorities. Approved operating contributions are provided to the Society by the Ministry through theHealth Authorities.

Revenues are recognized on an accrual basis in the period in which the transactions or events occurred thatgave rise to the revenues, the amounts are considered to be collectible and can be reasonably estimated.

Revenues related to fees or services received in advance of the fees being earned or the service beingperformed are deferred and recognized when the fees are earned or service performed.

Externally restricted contributions are recognized as revenue depending on the nature of the restrictions on theuse of the funds by the contributors as described in the Basis of accounting note above.

Volunteers contribute a significant amount of their time each year to assist the Society in carrying out itsprograms and services. Because of the difficulty of determining their fair value, contributed services are notrecognized in these financial statements.

Contributions of assets, supplies and services that would otherwise have been purchased are recorded at fairvalue at the date of contribution, provided a fair value can be reasonably determined.

Pharmacy revenue, dental clinic revenue, medical clinic revenue and other revenue are recognized when thesales occur and/or when the services have been performed and collection is reasonably assured.

Rental revenue is recognized in the period in which it is earned.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits and short-term highly liquid investments thatare readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value.These short-term investments generally have a maturity of three months or less at acquisition and are held forthe purpose of meeting short-term cash commitments rather than for investing.

(continues)

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Prepaid expenses

Prepaid expenses include cash disbursements for future events, and operational costs, which will be charged toexpense over the periods expected to benefit from it.

Non-financial assets

(i) Tangible capital assets:

Tangible capital assets are recorded at cost, which includes amounts that are directly attributable toacquisition, construction, development or betterment of the asset. Costs include overhead directlyattributable to construction and development. Interest is capitalized over the development period wheneverexternal debt is issued to finance the construction and development of tangible capital assets.

The cost, less residual value, of the tangible capital assets, excluding land, is amortized on a straight linebasis over their estimated useful lives as follows:

Land non-amortizableLand improvements 5 - 25 years straight-line methodBuildings and trailers 10 - 50 years straight-line methodEquipment 3 - 25 years straight-line method

Assets under construction or development are not amortized until the asset is available for productive use.

Tangible capital assets are written down when conditions indicate that they no longer contribute to theSociety’s ability to provide services, or when the value of future economic benefits associated with thetangible capital assets are less than their net book value. The write-downs of tangible capital assets arerecorded in the statement of operations. Write-downs are not subsequently reversed.

Contributed tangible capital assets are recorded at their fair value on the date of contribution. When fairvalue of a contributed asset cannot be reliably determined, the asset is recorded at nominal value.

(ii) Inventories held for use:

Inventories held for use are recorded at the lower of weighted average cost and replacement cost.

(continues)

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Asset retirement obligations

The Society recognizes an asset retirement obligation in the period in which it incurs a legal or constructiveobligation associated with the retirement of a tangible capital asset, including leasehold improvements resultingfrom the acquisition, construction, development, and/or normal use of the asset.

Obligations which can be reasonably estimated are measured at the best estimate of the future cash flowsrequired to settle the liabilities, discounted at estimated credit-adjusted risk-free discount rates. The estimatedamount of the asset retirement cost is capitalized as part of the carrying value of the related tangible capitalasset and is amortized over the life of the asset.

The liability is accreted to reflect the passage of time. At each reporting date, the Society reviews its assetretirement obligations to reflect current best estimates. Asset retirement obligations are adjusted for changes infactors such as the amount or timing of the expected underlying cash flows, or discount rates, with the offsettingamount recorded to the carrying amount of the related asset.

Financial instruments

The Society has implemented PS section 3450 Financial Instruments as of April 1, 2012 and the section hasbeen applied on prospective basis. For the year ended March 31, 2012, the Hospital applied financialinstrument disclosure and presentation standards in accordance with CPAC Handbook Section 3861. Financialinstrument classification is determined upon inception and financial instruments are not reclassified intoanother measurement category for the duration of the period they are held.

Financial assets and financial liabilities are measured at cost or amortized cost upon their inception andsubsequent to initial recognition. Cash and cash equivalents and marketable securities are measured at cost.Accounts receivable are recorded at amortized cost less any amount for valuation allowance. All debt and otherfinancial liabilities are recorded using cost or amortized cost.

All financial assets recorded at amortized cost are tested annually for impairment. When financial assets areimpaired, impairment losses are recorded in the statement of operations.

For financial instruments measured using amortized cost, the effective interest rate method is used to determineinterest revenue or expense.

Transaction costs for financial instruments measured using cost or amortized cost are added to the carryingvalue of the financial instrument.

A financial liability or its part is unrecognised when it is extinguished

(continues)

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Management evaluates contractual obligations for the existence of embedded derivatives and elects to eitherdesignate the entire contract for fair value measurement or separately measure the value of the derivativecomponent when characteristics of the derivative are not closely related to the economic characteristics andrisks of the contract itself. Contracts to buy or sell non-financial items for the normal purchase, sale or usagerequirements are not recognized as financial assets or financial liabilities.

Foreign currency translation

The Society’s functional currency is the Canadian dollar. Foreign currency transactions are translated at theexchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreigncurrencies are translated into Canadian dollars at the exchange rate prevailing at the financial statement date.Unrealized foreign exchange gains and losses are recognized in the statement of remeasurement gains andlosses. In the period of settlement, realized foreign exchange gains and losses are recognized in the statement ofoperations, and the cumulative amount of remeasurement gains and losses is reversed in the consolidatedstatement of remeasurement gains and losses.

Employee future benefits

(i) Defined benefit obligations:

Liabilities, net of plan assets, are recorded for employee retirement allowance benefits as employeesrender services to earn the benefits.

The actuarial determination of the accrued benefit obligations uses the projected benefit method proratedon service (which incorporates management’s best estimate of future salary levels, other cost escalation,retirement ages of employees and other actuarial factors). Plan assets are measured at fair value.

The cumulative unrecognized actuarial gains and losses are amortized over the expected averageremaining service lifetime of active employees covered under the plan. The expected average remainingservice period of the active covered employees entitled to retirement allowance benefits is 11 years (2015 -10 years).

The discount rate used to measure the obligation is based on the cost of borrowing. The cost of a planamendment or the crediting of past service is accounted for entirely in the year that the plan change isimplemented.

(continues)

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Asset retirement obligations

The Society recognizes an asset retirement obligation in the period in which it incurs a legal or constructiveobligation associated with the retirement of a tangible capital asset, including leasehold improvements resultingfrom the acquisition, construction, development, and/or normal use of the asset.

Obligations which can be reasonably estimated are measured at the best estimate of the future cash flowsrequired to settle the liabilities, discounted at estimated credit-adjusted risk-free discount rates. The estimatedamount of the asset retirement cost is capitalized as part of the carrying value of the related tangible capitalasset and is amortized over the life of the asset.

The liability is accreted to reflect the passage of time. At each reporting date, the Society reviews its assetretirement obligations to reflect current best estimates. Asset retirement obligations are adjusted for changes infactors such as the amount or timing of the expected underlying cash flows, or discount rates, with the offsettingamount recorded to the carrying amount of the related asset.

Financial instruments

The Society has implemented PS section 3450 Financial Instruments as of April 1, 2012 and the section hasbeen applied on prospective basis. For the year ended March 31, 2012, the Hospital applied financialinstrument disclosure and presentation standards in accordance with CPAC Handbook Section 3861. Financialinstrument classification is determined upon inception and financial instruments are not reclassified intoanother measurement category for the duration of the period they are held.

Financial assets and financial liabilities are measured at cost or amortized cost upon their inception andsubsequent to initial recognition. Cash and cash equivalents and marketable securities are measured at cost.Accounts receivable are recorded at amortized cost less any amount for valuation allowance. All debt and otherfinancial liabilities are recorded using cost or amortized cost.

All financial assets recorded at amortized cost are tested annually for impairment. When financial assets areimpaired, impairment losses are recorded in the statement of operations.

For financial instruments measured using amortized cost, the effective interest rate method is used to determineinterest revenue or expense.

Transaction costs for financial instruments measured using cost or amortized cost are added to the carryingvalue of the financial instrument.

A financial liability or its part is unrecognised when it is extinguished

(continues)

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Management evaluates contractual obligations for the existence of embedded derivatives and elects to eitherdesignate the entire contract for fair value measurement or separately measure the value of the derivativecomponent when characteristics of the derivative are not closely related to the economic characteristics andrisks of the contract itself. Contracts to buy or sell non-financial items for the normal purchase, sale or usagerequirements are not recognized as financial assets or financial liabilities.

Foreign currency translation

The Society’s functional currency is the Canadian dollar. Foreign currency transactions are translated at theexchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreigncurrencies are translated into Canadian dollars at the exchange rate prevailing at the financial statement date.Unrealized foreign exchange gains and losses are recognized in the statement of remeasurement gains andlosses. In the period of settlement, realized foreign exchange gains and losses are recognized in the statement ofoperations, and the cumulative amount of remeasurement gains and losses is reversed in the consolidatedstatement of remeasurement gains and losses.

Employee future benefits

(i) Defined benefit obligations:

Liabilities, net of plan assets, are recorded for employee retirement allowance benefits as employeesrender services to earn the benefits.

The actuarial determination of the accrued benefit obligations uses the projected benefit method proratedon service (which incorporates management’s best estimate of future salary levels, other cost escalation,retirement ages of employees and other actuarial factors). Plan assets are measured at fair value.

The cumulative unrecognized actuarial gains and losses are amortized over the expected averageremaining service lifetime of active employees covered under the plan. The expected average remainingservice period of the active covered employees entitled to retirement allowance benefits is 11 years (2015 -10 years).

The discount rate used to measure the obligation is based on the cost of borrowing. The cost of a planamendment or the crediting of past service is accounted for entirely in the year that the plan change isimplemented.

(continues)

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(ii) Defined contribution plans and multi-employer benefit plans:

Defined contribution plan accounting is applied to multi-employer defined benefit plans and, accordingly,contributions are expensed when due and payable.

(iii) Accumulating, non-vesting benefit plans:

Benefits that accrue to employees, which do not vest, such as sick leave banks for certain employeegroups, are accrued as the employees render services to earn the benefits, based on estimates of theexpected future settlements.

(iv) Non-accumulating, non-vesting benefit plans:

For benefits that do not vest or accumulate, a liability is recognized when an event that obligates theSociety to pay benefits occurs.

Asset and service contributions

Volunteers contribute a significant amount of time each year to assist the Society in carrying out its programsand services. Due to the difficulty in determining their fair value, contributed services are not recognized in thefinancial statements.

Measurement uncertainty

The preparation of financial statements requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period.

Significant areas requiring the use of estimates include the valuation of accounts receivable and inventories, thedetermination of obsolescence and useful lives of tangible capital assets and the related deferred capitalcontributions, accrued liabilities and contingent liabilities, and the assumptions with respect to long-termdisability benefits and retirement allowance.

Estimates are based on the best information available at the time of preparation of the financial statements andare reviewed annually to reflect new information as it becomes available. Actual results could differ from theestimates.

Budgeted figures

Budget figures have been provided for comparative purposes and have been derived from the Society’s Fiscal2015/2016 Budget approved by the Board of Governors. The budget is reflected in the Statement of Operationsand Accumulated Operating Surplus.

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3. FINANCIAL INSTRUMENTS

The Society is exposed to various risks through its financial instruments and has a comprehensive riskmanagement framework to monitor, evaluate and manage these risks. The following analysis providesinformation about the Society's risk exposure and concentration as of March 31, 2016.

Credit risk

Credit risk primarily arises from the Society's accounts receivable and risk exposure is limited to the balance atthe date of of the statement of financial position. Accounts receivable primarily consist of amounts receivablefrom patients, clients and residents, Regional Hospital Districts and other Health Authorities and BCgovernment reporting entities . To reduce the risk, the Society periodically reviews the collectability of itsaccounts receivable and establishes an allowance based on its best estimate of potentially uncollectableamounts.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financialliabilities. It is the Society's intention to meet its financial obligations through the collection of currentaccounts receivable and future funding from the Ministry.

Foreign exchange risk

Foreign exchange risk is the risk to the company's earnings that arise from fluctuations of foreign exchangerates and the degree of volatility of these rates. The Society has not entered into any agreements or purchasedany foreign currency hedging arrangements to hedge possible currency risks, as management believes that theforeign exchange risk derived from currency conventions is not significant. The foreign currency financialinstruments are short-term in nature and do not give rise to significant foreign currency risk.

4. DUE FROM/TO HEALTH AUTHORITIES

2016 2015

Due from Northern Health Authority $ 88,475 $ 839,631

The amount due from Northern Health Authority relates to funds held on behalf of the Wrinch MemorialHospital in the amount of $88,475 (2015 - $839,631).

5. INVENTORIES HELD FOR SALE

Inventories held for sale are comprised of:

2016 2015

Pharmaceuticals $ 138,594 $ 138,236

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(ii) Defined contribution plans and multi-employer benefit plans:

Defined contribution plan accounting is applied to multi-employer defined benefit plans and, accordingly,contributions are expensed when due and payable.

(iii) Accumulating, non-vesting benefit plans:

Benefits that accrue to employees, which do not vest, such as sick leave banks for certain employeegroups, are accrued as the employees render services to earn the benefits, based on estimates of theexpected future settlements.

(iv) Non-accumulating, non-vesting benefit plans:

For benefits that do not vest or accumulate, a liability is recognized when an event that obligates theSociety to pay benefits occurs.

Asset and service contributions

Volunteers contribute a significant amount of time each year to assist the Society in carrying out its programsand services. Due to the difficulty in determining their fair value, contributed services are not recognized in thefinancial statements.

Measurement uncertainty

The preparation of financial statements requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period.

Significant areas requiring the use of estimates include the valuation of accounts receivable and inventories, thedetermination of obsolescence and useful lives of tangible capital assets and the related deferred capitalcontributions, accrued liabilities and contingent liabilities, and the assumptions with respect to long-termdisability benefits and retirement allowance.

Estimates are based on the best information available at the time of preparation of the financial statements andare reviewed annually to reflect new information as it becomes available. Actual results could differ from theestimates.

Budgeted figures

Budget figures have been provided for comparative purposes and have been derived from the Society’s Fiscal2015/2016 Budget approved by the Board of Governors. The budget is reflected in the Statement of Operationsand Accumulated Operating Surplus.

14




3. FINANCIAL INSTRUMENTS

The Society is exposed to various risks through its financial instruments and has a comprehensive riskmanagement framework to monitor, evaluate and manage these risks. The following analysis providesinformation about the Society's risk exposure and concentration as of March 31, 2016.

Credit risk

Credit risk primarily arises from the Society's accounts receivable and risk exposure is limited to the balance atthe date of of the statement of financial position. Accounts receivable primarily consist of amounts receivablefrom patients, clients and residents, Regional Hospital Districts and other Health Authorities and BCgovernment reporting entities . To reduce the risk, the Society periodically reviews the collectability of itsaccounts receivable and establishes an allowance based on its best estimate of potentially uncollectableamounts.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financialliabilities. It is the Society's intention to meet its financial obligations through the collection of currentaccounts receivable and future funding from the Ministry.

Foreign exchange risk

Foreign exchange risk is the risk to the company's earnings that arise from fluctuations of foreign exchangerates and the degree of volatility of these rates. The Society has not entered into any agreements or purchasedany foreign currency hedging arrangements to hedge possible currency risks, as management believes that theforeign exchange risk derived from currency conventions is not significant. The foreign currency financialinstruments are short-term in nature and do not give rise to significant foreign currency risk.

4. DUE FROM/TO HEALTH AUTHORITIES

2016 2015

Due from Northern Health Authority $ 88,475 $ 839,631

The amount due from Northern Health Authority relates to funds held on behalf of the Wrinch MemorialHospital in the amount of $88,475 (2015 - $839,631).

5. INVENTORIES HELD FOR SALE

Inventories held for sale are comprised of:

2016 2015

Pharmaceuticals $ 138,594 $ 138,236

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6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consists of:

2016 2015

Trade accounts payable and accrued liabilities $ 597,538 $ 690,610Salaries and benefits payable 1,150 1,982Accrued vacation payable 296,971 265,439Continuing medical education - 2,105Accumulated post-graduate fund 1,799 7,381

$ 897,458 $ 967,517

7. ACCRUED EMPLOYEE BENEFITS

(a) Retirement benefits:

Certain employees of the Society with ten or twenty years of service and having reached a certain age areentitled to receive special payments upon retirement or as specified in the collective agreements. Thesepayments are based upon accumulated sick leave credits and entitlements for each year of service.

The Society's liabilities are based on an actuarial valuation as of the early measurement date of December 31,2015 and extrapolated to March 31, 2016 from which the service cost and interest components of expense forthe fiscal year ended March 31, 2016 are derived.

Information about employee retirement allowance benefits is as follows:

2016 2015

Employee future benefits, beginning of year $ 390,252 $ 770,741Additions to employee future benefits 47,610 19,696Benefits paid (27,491) (33,000)Transfer of benefits to VCHA - (367,185)

Accrued employee future benefits 410,371 390,252

Severance benefits 258,650 220,330Sick leave benefits 216,212 162,922

Subtotal 474,862 383,252Unamortized actuarial gain (64,491) 7,000

Accrued employee future benefits $ 410,371 $ 770,741

(continues)

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7. ACCRUED EMPLOYEE BENEFITS (continued)

The significant actuarial assumptions adopted in measuring the Society's accrued retirement allowance are asfollows:

Accrued benefit obligation as at March 31: Discount rate 3.93% 3.98% Rate of compensation increase 2.50% 2.50%

Benefit costs for years ended March 31: Discount rate 3.98% 4.26% Rate of compensation increase 2.50% 2.50%

(b) Long-term disability:

The Society belongs to the Health Employers' Association of B.C. Healthcare Benefit Trust ("Trust"), under amulti-employer defined benefit plan that covers group long-term disability, life, accidental death anddismemberment, extended health and dental claims for employees belonging to the Hospital Employees' Union,the British Columbia Nurses' Union, the International Union of Operating Engineers, the British ColumbiaGovernment and Service Employees' Union, the Canadian Union of Public Employees, the Health SciencesAssociation, the Professional Association of Residents and Interns and certain non-unionized employees. Themost recent actuarial valuation at December 31, 2012 indicated a surplus of $62.5 million.

While the trust has been restricted, the Society and other participating employers continue to be responsible forthe liabilities of the Trust should any participating employers be unable to meet their obligation to contribute tothe Trust. As a multi-employer plan, the actuary does not attribute any unfunded liability to individualemployers. Consequently, the Society's share of this unfunded liability cannot be determined.

(c) Employee pension benefits:

The Society and certain of its employees contribute to the Municipal Pension Plan, a multi-employer definedbenefit pension plan governed by the B.C. Public Sector Pension Plans Act.

Employer contributions to the Municipal Pension Plan of $260,979 (2015 - $215,941) were expensed duringthe year. Every three years an actuarial valuation is performed to assess the financial position of the plan andthe adequacy of plan funding. The most recent actuarial valuation for the plan at December 31, 2012 indicatedan unfunded liability of $1,370 million. The actuary does not attribute portions of the deficit to individualemployers. The plan covers approximately 182,000 active employees, of which 80 are employees of theSociety. The next expected actuarial valuation date will be as of December 31, 2015, with results available infall 2016.

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6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consists of:

2016 2015

Trade accounts payable and accrued liabilities $ 597,538 $ 690,610Salaries and benefits payable 1,150 1,982Accrued vacation payable 296,971 265,439Continuing medical education - 2,105Accumulated post-graduate fund 1,799 7,381

$ 897,458 $ 967,517

7. ACCRUED EMPLOYEE BENEFITS

(a) Retirement benefits:

Certain employees of the Society with ten or twenty years of service and having reached a certain age areentitled to receive special payments upon retirement or as specified in the collective agreements. Thesepayments are based upon accumulated sick leave credits and entitlements for each year of service.

The Society's liabilities are based on an actuarial valuation as of the early measurement date of December 31,2015 and extrapolated to March 31, 2016 from which the service cost and interest components of expense forthe fiscal year ended March 31, 2016 are derived.

Information about employee retirement allowance benefits is as follows:

2016 2015

Employee future benefits, beginning of year $ 390,252 $ 770,741Additions to employee future benefits 47,610 19,696Benefits paid (27,491) (33,000)Transfer of benefits to VCHA - (367,185)

Accrued employee future benefits 410,371 390,252

Severance benefits 258,650 220,330Sick leave benefits 216,212 162,922

Subtotal 474,862 383,252Unamortized actuarial gain (64,491) 7,000

Accrued employee future benefits $ 410,371 $ 770,741

(continues)

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7. ACCRUED EMPLOYEE BENEFITS (continued)

The significant actuarial assumptions adopted in measuring the Society's accrued retirement allowance are asfollows:

Accrued benefit obligation as at March 31: Discount rate 3.93% 3.98% Rate of compensation increase 2.50% 2.50%

Benefit costs for years ended March 31: Discount rate 3.98% 4.26% Rate of compensation increase 2.50% 2.50%

(b) Long-term disability:

The Society belongs to the Health Employers' Association of B.C. Healthcare Benefit Trust ("Trust"), under amulti-employer defined benefit plan that covers group long-term disability, life, accidental death anddismemberment, extended health and dental claims for employees belonging to the Hospital Employees' Union,the British Columbia Nurses' Union, the International Union of Operating Engineers, the British ColumbiaGovernment and Service Employees' Union, the Canadian Union of Public Employees, the Health SciencesAssociation, the Professional Association of Residents and Interns and certain non-unionized employees. Themost recent actuarial valuation at December 31, 2012 indicated a surplus of $62.5 million.

While the trust has been restricted, the Society and other participating employers continue to be responsible forthe liabilities of the Trust should any participating employers be unable to meet their obligation to contribute tothe Trust. As a multi-employer plan, the actuary does not attribute any unfunded liability to individualemployers. Consequently, the Society's share of this unfunded liability cannot be determined.

(c) Employee pension benefits:

The Society and certain of its employees contribute to the Municipal Pension Plan, a multi-employer definedbenefit pension plan governed by the B.C. Public Sector Pension Plans Act.

Employer contributions to the Municipal Pension Plan of $260,979 (2015 - $215,941) were expensed duringthe year. Every three years an actuarial valuation is performed to assess the financial position of the plan andthe adequacy of plan funding. The most recent actuarial valuation for the plan at December 31, 2012 indicatedan unfunded liability of $1,370 million. The actuary does not attribute portions of the deficit to individualemployers. The plan covers approximately 182,000 active employees, of which 80 are employees of theSociety. The next expected actuarial valuation date will be as of December 31, 2015, with results available infall 2016.

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8. DEFERRED CAPITAL CONTRIBUTIONS

Deferred capital contributions represent externally restricted contributions and other funding received for thepurchase of capital assets. The amortization of deferred capital contributions is recorded as revenue in thestatement of operations.

2016 2015

Deferred capital contributions, beginning of year $ 2,893,050 $ 9,057,791Capital contributions received or receivable 473,449 398,899Contribution refund to Northern Health Authority (134,961) -

Subtotal 3,231,538 9,456,690Less: reclassification of funds received - (26,451)Less: amortization for the year (369,476) (412,586)Less: transfer of contributions to VCHA - (6,124,603)

$ 2,862,062 $ 2,893,050

Deferred capital contributions are comprised of the following:

Contributions used to purchase capital assets $ 2,862,062 $ 2,340,918Unspent contributions - 552,132

$ 2,862,062 $ 2,893,050

9. INVENTORIES HELD FOR USE

Inventories of materials and supplies are comprised of:

2016 2015

Medical and dental supplies $ 71,284 $ 87,213

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Year ended March 31, 2016

10. TANGIBLE CAPITAL ASSETS

Balance at Balance atMarch 31, March 31,

Cost 2015 Additions Disposals 2016

Land and land improvements $ 45,060 $ - $ - $ 45,060Buildings and trailers 8,122,182 1,358,400 - 9,480,582Equipment 3,229,776 258,507 (73,744) 3,414,539Assets under construction 744,049 - (631,463) 112,586

Total $ 12,141,067 $ 985,444 $ (73,744) $ 13,052,767

Balance at Balance atAccumulated March 31, Amortization March 31,amortization 2015 Disposals expense 2016

Land and land improvements $ 10,038 $ - $ - $ 10,038Buildings and trailers 6,939,080 118,331 239,144 7,296,554Equipment 2,498,595 (178,075) 199,007 2,519,527

Total $ 9,447,712 $ (59,744) $ 438,151 $ 9,826,119

Net book value Net book valueMarch 31, 2015 March 31, 2016

Land and land improvements $ 35,022 $ 35,022Buildings and trailers 1,183,102 2,184,027Equipment 731,182 895,012Assets under construction 744,049 112,586

Total $ 2,693,355 $ 3,226,647

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8. DEFERRED CAPITAL CONTRIBUTIONS

Deferred capital contributions represent externally restricted contributions and other funding received for thepurchase of capital assets. The amortization of deferred capital contributions is recorded as revenue in thestatement of operations.

2016 2015

Deferred capital contributions, beginning of year $ 2,893,050 $ 9,057,791Capital contributions received or receivable 473,449 398,899Contribution refund to Northern Health Authority (134,961) -

Subtotal 3,231,538 9,456,690Less: reclassification of funds received - (26,451)Less: amortization for the year (369,476) (412,586)Less: transfer of contributions to VCHA - (6,124,603)

$ 2,862,062 $ 2,893,050

Deferred capital contributions are comprised of the following:

Contributions used to purchase capital assets $ 2,862,062 $ 2,340,918Unspent contributions - 552,132

$ 2,862,062 $ 2,893,050

9. INVENTORIES HELD FOR USE

Inventories of materials and supplies are comprised of:

2016 2015

Medical and dental supplies $ 71,284 $ 87,213

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10. TANGIBLE CAPITAL ASSETS



Land and land improvements $ 45,060 $ - $ - $ 45,060Buildings and trailers 8,122,182 1,358,400 - 9,480,582Equipment 3,229,776 258,507 (73,744) 3,414,539Assets under construction 744,049 - (631,463) 112,586

Total $ 12,141,067 $ 985,444 $ (73,744) $ 13,052,767


Land and land improvements $ 10,038 $ - $ - $ 10,038Buildings and trailers 6,939,080 118,331 239,144 7,296,554Equipment 2,498,595 (178,075) 199,007 2,519,527

Total $ 9,447,712 $ (59,744) $ 438,151 $ 9,826,119


Land and land improvements $ 35,022 $ 35,022Buildings and trailers 1,183,102 2,184,027Equipment 731,182 895,012Assets under construction 744,049 112,586

Total $ 2,693,355 $ 3,226,647

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10. TANGIBLE CAPITAL ASSETS (continued)



Land and land improvements $ 45,060 $ - $ - $ 45,060Buildings and trailers 23,775,100 39,298 (15,692,216) 8,122,182Equipment 10,268,593 99,119 (7,137,935) 3,229,776Assets under construction 108,931 635,118 - 744,049

Total $ 34,197,684 $ 773,535 $ (22,830,151) $ 12,141,067


Land and land improvements $ 10,038 $ - $ - $ 10,038Buildings and trailers 19,775,697 (13,101,522) 264,905 6,939,080Equipment 8,527,583 (6,248,883) 219,895 2,498,595

Total $ 28,313,318 $(19,350,405) $ 484,799 $ 9,447,712


Land and land improvements $ 35,022 $ 35,022Buildings and trailers 3,999,403 1,183,102Equipment 1,714,010 731,182Assets under construction 108,931 744,049

Total $ 5,884,336 $ 2,693,355

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11. EXPENSES BY OBJECT

2016 2015

Compensation and benefits $ 6,489,776 $ 6,320,013Medical compensation 2,222,869 2,177,275Purchases services 596,721 550,883Drugs 2,223,633 1,924,650Administration and support 928,458 676,644Facility and equipment costs 545,190 526,710Amortization of tangible capital assets 438,151 484,799Medical and diagnostic supplies 125,513 145,706Patient support 86,737 92,892Loss on disposal of tangible capital assets 14,000 -Distributions to affiliated organizations 365,704 351,703

$ 14,036,752 $ 13,251,275

12. TERMINATION OF AGREEMENT WITH HEALTH AUTHORITY

As of April 1, 2016, the Affiliation Agreement dated September 21, 2010 between Northern Health Authority(“NHA”) and the United Church Health Services Society ("Society") was terminated. All financial assets, non-financial assets and liabilities of Wrinch Memorial Hospital will be transferred to NHA at their fair marketvalue.

13. DEVELOPMENT FUND

On April 26, 2011 the Society approved the establishment of a development fund in the amount of $1,000,000.These funds are to be used for future capital projects of the Society. The funds are being held by aninvestment broker and are presented as a part of marketable securities.

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10. TANGIBLE CAPITAL ASSETS (continued)



Land and land improvements $ 45,060 $ - $ - $ 45,060Buildings and trailers 23,775,100 39,298 (15,692,216) 8,122,182Equipment 10,268,593 99,119 (7,137,935) 3,229,776Assets under construction 108,931 635,118 - 744,049

Total $ 34,197,684 $ 773,535 $ (22,830,151) $ 12,141,067


Land and land improvements $ 10,038 $ - $ - $ 10,038Buildings and trailers 19,775,697 (13,101,522) 264,905 6,939,080Equipment 8,527,583 (6,248,883) 219,895 2,498,595

Total $ 28,313,318 $(19,350,405) $ 484,799 $ 9,447,712


Land and land improvements $ 35,022 $ 35,022Buildings and trailers 3,999,403 1,183,102Equipment 1,714,010 731,182Assets under construction 108,931 744,049

Total $ 5,884,336 $ 2,693,355

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11. EXPENSES BY OBJECT

2016 2015

Compensation and benefits $ 6,489,776 $ 6,320,013Medical compensation 2,222,869 2,177,275Purchases services 596,721 550,883Drugs 2,223,633 1,924,650Administration and support 928,458 676,644Facility and equipment costs 545,190 526,710Amortization of tangible capital assets 438,151 484,799Medical and diagnostic supplies 125,513 145,706Patient support 86,737 92,892Loss on disposal of tangible capital assets 14,000 -Distributions to affiliated organizations 365,704 351,703

$ 14,036,752 $ 13,251,275

12. TERMINATION OF AGREEMENT WITH HEALTH AUTHORITY

As of April 1, 2016, the Affiliation Agreement dated September 21, 2010 between Northern Health Authority(“NHA”) and the United Church Health Services Society ("Society") was terminated. All financial assets, non-financial assets and liabilities of Wrinch Memorial Hospital will be transferred to NHA at their fair marketvalue.

13. DEVELOPMENT FUND

On April 26, 2011 the Society approved the establishment of a development fund in the amount of $1,000,000.These funds are to be used for future capital projects of the Society. The funds are being held by aninvestment broker and are presented as a part of marketable securities.

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14. CHANGES IN NON-CASH WORKING CAPITAL 2016 2015

Accounts receivable $ (182,702) $ 573,929Due from health authorities 751,156 898,258Inventories held for sale 15,571 218,219Inventories held for use - 492,506Prepaid expenses 60,096 45,682Accounts payable and accrued liabilities (80,887) (1,264,501)Retirement allowance 20,119 (380,489)Deferred operating contributions (131,416) (64,677)Due to health authorities - (222,468)

$ 451,937 $ 296,459

15. COMPARATIVE FIGURES

Some of the comparative figures have been reclassified to conform to the current year's presentation.

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ANNUAL REPORTThe United Church Health Services Society

2015 – 2016

Dr. Horace Wrinch, traveling on horseback to care for patients.

Photos courtesy of Alice Mynett (granddaughter of Dr. Horace Wrinch)

ANNUAL REPORT - UNITED CHURCH HEALTH · ANNUAL REPORT The United Church ... full and creative...

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