consolidated financial statements - Cardus · 2011-12-02 · Invested in capital assets 12,739...

WORK RESEARCH FOUNDATION O/ACARDUS

consolidated

financial statements>YEAR ENDED DECEMBER 31, 2010

McClurkin Ahier & Company LLP

CHARTERED ACCOUNTANTS

WORK RESEARCH FOUNDATION O/A CARDUS>

consolidatedfinancial statements

>YEAR ENDED DECEMBER 31, 2010

indexIndependent auditor's report................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................1

Consolidated statement of financial position................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................2

Consolidated statement of changes in net assets................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3

Consolidated statement of operations................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................4

Consolidated statement of cash flows................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................5

Notes to consolidated financial statements................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................6 - 10

INDEPENDENT AUDITOR'S REPORTTo the Members of Work Research Foundation o/a Cardus:

Report on the Consolidated Financial StatementsWe have audited the accompanying consolidated financial statements of Work Research Foundation o/a Cardus,which comprise the consolidated statement of financial position as at December 31, 2010, and the consolidatedstatement of operations, consolidated statement of changes in net assets and consolidated statement of cash flowsfor the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements inaccordance with Canadian generally accepted accounting principles and for such internal control as managementdetermines is necessary to enable the preparation of financial statements that are free from material misstatement,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 preparationand fair presentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation of theconsolidated financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualifiedaudit opinion.

Basis for Qualified OpinionIn common with many similar charitable organizations, the Organization derives revenue from donations frominterested persons, the completeness of which is not susceptible to satisfactory audit verification. Accordingly, ourverification of these revenues was limited to the amounts recorded in the records of the Organization and we werenot able to determine whether any adjustments might be necessary to donation revenues, excess of revenues overexpenses, current assets and net assets.

Qualified OpinionIn 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 donation revenues referred to above, theconsolidated financial statements present fairly, in all material respects, the financial position of Work ResearchFoundation o/a Cardus as at December 31, 2010, and its financial performance and its cash flows for the year thenended in accordance with Canadian generally accepted accounting principles.

Waterloo, Ontario LICENSED PUBLIC ACCOUNTANTSJune 17, 2011 CHARTERED ACCOUNTANTS


consolidated statement offinancial position

>DECEMBER 31, 2010

2010 2009

assets

currentCash $ 377,316 $ 429,816Accounts receivable 53,855 51,196Prepaid expenses 8,501 5,499

439,672 486,511

capital assets (Note 4) 596,738 601,607

$ 1,036,410 $ 1,088,118

liabilities

currentAccounts payable and accrued liabilities $ 87,249 $ 23,659Deferred contributions (Note 6) 122,336 259,597Deferred revenue 40,000 10,000Current portion of long term debt 309,000 325,000

558,585 618,256

long term debt (Note 7) 275,000 275,000

833,585 893,256

commitments (Note 8)

net assets

Invested in capital assets 12,739 1,607Unrestricted net assets 190,086 193,255

202,825 194,862

$ 1,036,410 $ 1,088,118

Approved on behalf of the board:

Director Director

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consolidated statement of changes in net assets


2010 2009invested in

capital assets unrestricted total total

balance, beginning of year $ 1,607 $ 193,255 $ 194,862 $ 146,766

Excess (deficiency) of revenue over expenses for year (15,473) 23,436 7,963 48,096

Investment in capital assets 26,605 (26,605) - -

balance, end of year $ 12,739 $ 190,086 $ 202,825 $ 194,862

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consolidated statement ofoperations


2010 2009

revenueDonations $ 1,159,587 $ 1,156,776Activity income 278,513 331,193Reimbursements 16,469 4,106Rental income 55,546 20,989Foreign exchange gain (loss) 3,004 12,061

1,513,119 1,525,125

expensesAmortization 15,473 9,396Bank charges and interest 6,295 6,692Comment and think production and fulfillment 44,865 80,645Event expenses 46,192 44,212Human resources 1,103,941 1,005,712Interest on long term debt 26,394 10,456Marketing and promotion 12,962 43,115Meals and entertainment 16,070 17,750Meeting expenses 3,746 2,007Office expenses and miscellaneous 42,614 47,306Professional fees 11,478 13,487Relocation expenses - 23,372Rent and utilities 47,733 45,937Telecommunications 19,213 19,747Travel 108,180 107,195

1,505,156 1,477,029

excess of revenue over expenses for year $ 7,963 $ 48,096

4


consolidated statement ofcash flows


2010 2009

operating activitiesExcess of revenue over expenses for year $ 7,963 $ 48,096

Adjustments for:Amortization 15,473 9,396

23,436 57,492

Changes in non-cash working capital:Increase in accounts receivable (2,659) (24,773)Increase in prepaid expenses (3,002) 1,198Increase in accounts payable and accrued liabilities 63,591 7,049Decrease in deferred contributions (137,261) 259,597Increase in deferred revenue 30,000 10,000

(25,895) 310,563

financing activitiesAcquisition (repayment) of long term debt (16,000) 600,000

investing activitiesPurchase of capital assets (10,605) (607,735)

Net change in cash for the year (52,500) 302,828

Cash balance, beginning of year 429,816 126,988

cash balance, end of year $ 377,316 $ 429,816

Supplementary Information:Interest paid $ 26,394 $ 10,456

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notes to consolidated financialstatements


1. purpose of organization

Drawing on more than 2000 years of Christian social thought, the mission of Work ResearchFoundation o/a Cardus (the “Organization”) is to perform research and education in the renewal ofNorth American social architecture; to, for the common good, enrich and challenge public debatethrough research, events and publications. The Organization operates in Hamilton, Ontario and isincorporated under the Ontario Corporations Act as a not-for-profit organization. The Organizationis a registered charity for Canadian Income Tax purposes.

2. significant accounting policies

Principles of Consolidation - The consolidated financial statements include the accounts of WorkResearch Foundation o/a Cardus, Work Research Foundation US (WRF US), a controlledCalifornia based non-profit organization and WRF Services Inc, a controlled for-profit corporation.Inter-company accounts and transactions have been eliminated.

WRF US operates with a similar purpose as Cardus under the common control of the Board ofDirectors of Cardus. As at December 31, 2010, WRF US has advanced funds totaling $29,371 toCardus as a prepayment for services to be performed.

WRF Services Inc. is controlled by virtue of a common Board of Directors.

Revenue Recognition - The Organization follows the deferral method of accounting for revenue.Unrestricted contributions are recognized as revenue when received. Restricted contributions arerecognized as revenue when the related expense is incurred.

Capital Assets and Amortization - Capital assets are recorded at cost. Amortization is provided in theaccounts using the following methods and annual rates:

Asset Method PeriodBuilding Straight line 25 yearsComputer equipment Straight line 3 yearsFurniture and fixtures Straight line 5 years

Capital assets acquired during the year are amortized at one half the above annual rates.

Financial Instruments - The Organization has classified its financial assets and financial liabilities asfollows:

Cash is classified as held for trading.

Accounts receivable are classified as loans and receivables.

Accounts payable and accrued liabilities and long term debt are classified as other financialliabilities.

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Contributed Materials and Services - Volunteers contribute their time to assist the Organization incarrying out its service delivery activities. Because of the difficulty of determining their fair value,contributed services are not recognized in the financial statements.

The Organization receives contributed materials, the fair value of which may or may not be reasonablydeterminable. Contributed materials are recognized as donations when fair value can be determined.No contributed materials were recognized as donation revenue during the year.

Disclosure and Use of Estimates - The preparation of financial statements in accordance withCanadian generally accepted accounting principles requires management to make estimates andassumptions that affect the reported amount of assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and reported amounts of revenues and expensesduring the reporting period. These estimates are reviewed periodically, and as adjustments becomenecessary, they are reported in earnings in the period in which they become known.

Estimates are used when accounting for certain items such as revenues, allowance for doubtfulaccounts, useful lives of capital assets and asset impairments.

3. future accounting changes

The Canadian Institute of Chartered Accountants has approved a new framework for the sector that isbased on the existing Canadian GAAP and incorporates the 4400 series of standards. The newstandards are available as of December 1, 2010 as Part III of the CICA Handbook - Accounting andare effective January 1, 2012, with early adoption permitted. Organizations also have the option ofadopting International Financial Reporting Standards. Until the new standards are effective, allorganizations will continue to follow the existing accounting standards found in the CICA Handbook- Accounting. The Organization is currently evaluating the impact of the adoption of these newstandards on its financial statements. The Organization does not expect that the adoption of thesenew standards will have a material impact on its financial statements and intends to adopt thesestandards when effective.

4. capital assets

accumulated net netcost amortization 2010 2009

Land $ 150,000 $ - $ 150,000 $ 150,000Building 447,765 14,476 433,289 433,252Computer equipment 18,683 15,512 3,171 5,567Furniture and fixtures 18,781 8,503 10,278 12,788

$ 635,229 $ 38,491 $ 596,738 $ 601,607

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5. bank indebtedness

The Organization has a $90,000 line of credit bearing interest at prime plus 2.25% secured by ageneral security agreement over the assets of the Organization.

6. deferred contributions

During the year, the Organization received funds from interested parties to support specific projects.The following reflects the continuity of the funds received and the amounts deferred to future periods:

2010 2009

Balance, beginning of year $ 259,597 $ -

Amounts received designated for specific projects 169,697 565,290

Amounts recognized as revenue in the year (306,958) $ (305,693)

Balance, end of year $ 122,336 $ 259,597

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7. long term debt

2010 2009

First mortgage - repayable in monthly principalinstalments of $1,333 plus interest fixed quarterly, atCIBC prime plus 2%, secured by land and building.Subject to a 75 day demand provision, the mortgage isrenewable for four successive one year terms endingAugust 31, 2014. $ 309,000 $ 325,000

Five year promissory note due August 6, 2014, bearinginterest at 6% requiring monthly interest only paymentsof $1,375, renewable for an additional five year term atthe option of the borrower. 275,000 275,000

584,000 600,000

Less portion due within one year 309,000 325,000

$ 275,000 $ 275,000

The aggregate amount of principal payments required on the long term debt in each of the next fiveyears is as follows:

2011 $ 309,0002014 $ 275,000

8. commitments

The Organization is obligated under leasing contracts for office equipment which expire in 2013. Thefuture minimum lease payments are as follows:

2011 $ 6,1342012 5,6522013 4,710

$ 16,496

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9. financial instruments

Fair value - The fair value of financial assets and liabilities classified as loans and receivables and otherfinancial liabilities (excluding long term debt) approximate their carrying value due to their short termmaturity. Financial assets and liabilities classified as held for trading are measured at fair valuedetermined on the basis of market value. The fair values of the components of long term debt aredetermined by discounting future cash flows in accordance with existing financing agreements, basedon the market interest rates offered to the organization for loans with similar terms, conditions andmaturity dates.

Risk management - The Company is exposed to various risks through its financial instruments. Thefollowing analysis provides a measure of these risks at December 31, 2010.

Credit risk - The Organization provides credit to its clients in the normal course of operations. Creditrisk is minimized through progress billings and the use of retainers.

Interest rate risk - 47% of the long term debt bears interest at a fixed rate while 53% bears interest ata variable rate. The variable rate debt is renewable in one year increments. Consequently, the longterm debt risk exposure is minimal.

Currency Risk - Some assets, liabilities, revenues and expenses are exposed to foreign exchangefluctuations. As at December 31, 2010, cash, accounts receivable, accounts payable and accruedliabilities and deferred contributions of $108,148, $15,567, $32,811 and $122,336 respectively(2009 - $194,304, $611, $2,117 and $259,597) are denominated in US dollars.

10. capital disclosures

The Organizations's objectives in managing its capital, which it defines as its net assets, are to maintaina sufficient level to provide for normal operating requirements on an ongoing basis and to continue itsmission as disclosed in Note 1. The Organization manages its capital by ensuring it has sufficientfunds before committing to expenditures.

As a Registered Charity, the Organization is required to devote its resources to activities in pursuit ofits own charitable purposes. Failure to comply can lead to the revocation of the Organization'scharitable status. The Organization was in compliance with these requirements for the current fiscalyear.

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consolidated financial statements - Cardus · 2011-12-02 · Invested in capital assets 12,739...

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