FH CANADA Financial Statements September 30, 2013
Table of Contents
Page
Independent Auditors' Report
1
Statement of Operations
3
Statement of Net Assets
4
Statement of Financial Position
5
Statement of Cash Flows
6
Notes to Financial Statements
7
INDEPENDENT AUDITORS' REPORT To the members of: FH CANADA We were engaged to audit the accompanying financial statements of FH Canada which are comprised of the balance sheet as at September 30, 2013, and the statements of operations, net assets and cash flow for the year then ended, along with a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion In common with many charitable organizations, the society derives part of its revenue from the general public in the form of donations; the completeness of which is not susceptible to satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the society and we were not able to determine whether any adjustment might be necessary to contributions, excess of revenue over expenses, current assets, and net assets.
1
INDEPENDENT AUDITORS' REPORT (Continued) Qualified Opinion In our opinion, except for the effects of the preceding paragraph, these financial statements present fairly, in all material respects, the financial position of FH Canada as at September 30, 2013 and its financial performance and its cash flows for the year then ended, in accordance with Canadian generally accepted accounting principles.
CERTIFIED GENERAL ACCOUNTANTS Abbotsford, B.C. January 16, 2014
2
FH CANADA Statement of Operations For the year ended September 30, 2013 Operating
REVENUE Contributions - program donations Donated commodities (Note 2.e) Contributions - sponsorships Sales and service income Gifts in kind (Note 2.f) Investment income Grants - government Miscellaneous income
$ 2,846,202 $ 1,962,056 1,691,959 38,568 24,235 12,933 10,882 470 6,587,305
EXPENSES Commodities sent to the field (Note 2.e) Direct international program payments Salaries and related costs Media and events Travel Commodity shipping and other costs Occupancy Professional and third party fees Data processing and communications Postage and delivery Amortization Meals, entertainment and related expenses Office supplies and expenses Insurance Grants to qualified donees CIDA grants remitted
EXCESS OF REVENUE/(EXPENSES) BEFORE OTHER ITEMS Foreign exchange gain / (loss) Investment gain / (loss) Gain / (loss) on fixed asset disposal EXCESS OF REVENUE/(EXPENSES)
$
2013
Capital
2012
- $ 2,846,202 $ 2,536,177 1,962,056 1,664,760 1,691,959 1,587,661 38,568 10,706 24,235 103,659 12,933 10,245 10,882 128,154 470 -
6,587,305
6,041,362
1,916,818 2,017,728 1,264,441 352,049 210,751 173,642 135,758 127,506 106,990 77,096 21,093 20,571 13,630 500 -
51,044 -
1,916,818 2,017,728 1,264,441 352,049 210,751 173,642 135,758 127,506 106,990 77,096 51,044 21,093 20,571 13,630 500 -
2,056,914 1,678,009 1,343,102 324,298 244,655 250,671 132,905 92,517 93,458 104,817 71,692 15,189 32,972 12,113 20,682 56,720
6,438,573
51,044
6,489,617
6,530,714
148,732 12,888 11,037 -
(51,044) (865)
97,688 12,888 11,037 (865)
(489,352) (7,588) 7,214 (4,168)
172,657 $
(51,909)$
120,748 $
(493,894)
See accompanying Notes to Financial Statements and Auditor's Report
3
FH CANADA Statement of Net Assets For the year ended September 30, 2013 Operating
NET ASSETS - Open Excess of Revenue / (Expenses) Interfund transfers NET ASSETS - Close
$
Capital
2013
2012
892,368 $
369,132 $ 1,261,500 $ 1,755,394
172,657
(51,909)
(1,636) $ 1,063,389 $
See accompanying Notes to Financial Statements and Auditor's Report
1,636
120,748 -
(493,894) -
318,859 $ 1,382,248 $ 1,261,500
4
FH CANADA Statement of Financial Position As at September 30, 2013 Operating
Capital
2013
2012
297,868 $ 879,237 805,226 101,706 3,577
238,487 849,907 5,096 734,515 124,918 20,420
ASSETS CURRENT ASSETS Cash and short-term deposits Investments Accounts receivable Inventory (Note 4) Prepaid expenses Sales taxes refundable
$
297,868 $ 879,237 805,226 101,706 3,577 2,087,614
CAPITAL ASSETS (Note 5)
-
TOTAL ASSETS
$ 2,087,614 $
- $ 318,859
2,087,614
1,973,343
318,859
369,132
318,859 $ 2,406,473 $ 2,342,475
LIABILITIES & NET ASSETS CURRENT LIABILITIES Accounts payable and accruals Wages payable Deferred revenue (Note 1.c)(Note 6)
$
96,191 $ 23,883 904,151 1,024,225
NET ASSETS
1,063,389
TOTAL LIABILITIES & NET ASSETS
$ 2,087,614 $
- $ 318,859
96,191 $ 23,883 904,151
117,490 14,698 948,787
1,024,225
1,080,975
1,382,248
1,261,500
318,859 $ 2,406,473 $ 2,342,475
APPROVED ON BEHALF OF THE BOARD:
Director
See accompanying Notes to Financial Statements and Auditor's Report
Director
5
FH CANADA Statement of Cash Flows For the year ended September 30, 2013 Operating OPERATING ACTIVITIES Excess of Revenue/(Expenses) from operations Add: non-cash items affecting operations Amortization Accounts receivable Inventory Prepaid expenses Accounts payable and accruals Sales taxes Wages payable Deferred revenue Loss on disposal of capital assets
$
120,748 $
(493,894)
5,096 (70,711) 23,213 (21,300) 16,843 9,185 (44,636) -
51,044 865
51,044 5,096 (70,711) 23,213 (21,300) 16,843 9,185 (44,636) 865
71,692 41,322 346,897 (68,858) (51,596) 2,346 3,139 235,092 4,168
90,347
90,308
(1,636)
(21,570)
(29,330)
(662,868)
59,381
(594,130)
(29,330)
(1,636) -
INCREASE IN CASH OR EQUIVALENTS
61,017
(1,636)
INTERFUND TRANSFERS
(1,636)
1,636
CASH - CLOSE
$
2012
(51,909)$
FINANCING ACTIVITIES Capital asset additions
CASH - OPEN
2013
172,657 $
90,347
INVESTING ACTIVITIES Investments
Capital
238,487
-
297,868 $
-
See accompanying Notes to Financial Statements and Auditor's Report
-
$
-
238,487
832,617
297,868 $
238,487
6
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
1.
DEFINITION OF ENTITY FH Canada is incorporated under the Canada Not-for-profit Corporations Act and is registered as a charity for income tax purposes, and accordingly, is exempt from income taxes on its operations. The objectives of FH Canada are to provide sustainable development and disaster relief to the needy and destitute of the world, and to provide educational programs and information in Canada to enhance public understanding of the issues surrounding poverty.
2.
ACCOUNTING POLICIES (a) Accounting Framework These statements have been prepared in accordance with Canadian Accounting Standards for Not-for Profit Organizations which is a framework available under Canadian GAAP (Part III of the CICA Handbook). (b) Revenue Recognition The society uses the deferral method of accounting for contributions. Contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Contributions related to expenses of future periods are deferred and recognized as revenue in the period when the related expenses are incurred. (c) Deferred Revenue Deferred revenue represents funds received during the year for projects that are to commence or continue in future fiscal periods. These funds will be included in income when expenses are incurred for the projects for which the funds have been received. (d) Contributed Services A substantial number of volunteers contribute a significant amount of their time each year. Because of the difficulty of determining the fair value, contributed services are not recognized in the financial statements. (e) Commodity Values Commodity values represent the fair market value of donated and purchased supplies shipped to various areas of need around the world. Commodities donated to the society are stored at the society's warehouse until shipped. They are recognized as income when they are brought to full working order and shipped.
See accompanying Auditor's Report
7
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Gift in Kind Donations Donations of goods and supplies are recognized in the accounts of the society at estimated fair market value when the goods and supplies are used in the normal course of the society's operations and would otherwise have been acquired for distribution in accordance with the society's purpose and objectives. The total donations in kind received during the year was $1,986,291 (2012 - $1,761,419). (g) Amortization Capital assets are recorded at cost and are being amortized on the declining balance basis over the estimated useful life of the assets, with current year additions amortized at half of the usual rate, as follows: Buildings Motor vehicles Furniture and fixtures Computer equipment
5 20 20 40
% % % %
Leasehold improvements are being amortized on the straight-line basis over their estimated useful life. Computer software is being amortized on the straight-line basis over three years. Current year additions to leasehold improvements and computer software are amortized at half of the usual rate. (h) Fund Accounting The society uses fund accounting procedures to account separately for resources that have been designated for specific purposes and to maintain stewardship responsibility. Established funds are as follows: Operating A central fund that bears the costs of conducting the society's primary functions, into which all unrestricted funds flow. Capital A fund in which the resources are intended for use in capital improvements or to acquire and finance new capital assets.
See accompanying Auditor's Report
8
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
SIGNIFICANT ACCOUNTING POLICIES (Continued) (i) Use of estimates The preparation of the financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements, as well as reported amounts of revenues and expenses during the reporting period. These estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. (j) Foreign Currency Foreign-currency-denominated monetary assets and liabilities are translated to Canadian dollars at the exchange rate in effect at the balance sheet date. Foreign-currency-denominated non-monetary assets and liabilities are translated to Canadian dollars at the exchange rate in effect on the transaction date. Revenue and expense items are translated at the exchange rate in effect at the time of the transaction. Amortization and property write-downs are translated at the same exchange rate as the assets to which they relate. Foreign exchange gains or losses are included in the determination of net earnings for the year.
3.
FINANCIAL INSTRUMENTS Financial instruments are defined as a contractual right to either receive or deliver cash or another financial instrument to another party. The company's financial instruments consist of the following items: Cash and short-term deposits Investments Accounts receivable Prepaid expenses Accounts payable and accruals Fair Value The carrying amount of cash and short-term deposits, investments, accounts receivable, prepaid expenses and accounts payable and accruals approximates their fair value because of the short-term nature of these items. Credit Risk The society's financial assets that are exposed to credit risk are cash, investments and accounts receivable. Credit risk associated with cash and investments is minimized substantially by ensuring these assets are invested in accounts at a Schedule I bank with investment grade ratings. Credit risk associated with accounts receivable is minimized by restricting the granting of credit and by application of internal collection policies and procedures.
See accompanying Auditor's Report
9
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
FINANCIAL INSTRUMENTS (Continued) Interest Rate Risk The society is not exposed to interest rate risk. Foreign Currency Risk The society is exposed to foreign exchange risk on cash, and accounts payable which are transacted in US dollars.
4.
INVENTORY Inventory consists of donated equipment and supplies awaiting shipment and is recorded at estimated fair market value at the time of contribution.
5.
CAPITAL ASSETS Original Cost
Land Buildings Leasehold improvements Computer hardware Computer software Furniture and fixtures Motor vehicles
Accumulated Amortization
2013
2012
$ 48,230 372,666 42,615 42,636 137,010 75,365 12,500
$
(148,814) (26,303) (33,140) (128,714) (68,145) (7,047)
$ 48,230 223,852 16,312 9,496 8,296 7,220 5,453
$ 48,230 235,634 20,760 13,818 33,896 9,977 6,817
$ 731,022
$(412,163)
$ 318,859
$ 369,132
The society has written off obsolete capital assets of $6,142 in furniture and fixtures, and $1,766 in computer hardware resulting in net losses of $865.
See accompanying Auditor's Report
10
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
6.
DEFERRED REVENUE Deferred revenue represents unspent resources externally restricted for operating funding received in the current period that is related to the subsequent fiscal year. Changes in the deferred contributions balance are as follows:
Opening balance Less: amounts recognized as revenue in the year Add: amounts received related to next year
7.
2013
2012
$
948,787 $ (617,789) 573,153
713,696 (513,410) 748,501
$
904,151 $
948,787
CONTRACT OBLIGATIONS Foreign Currency The society has entered into foreign exchange contracts to purchase $65,000 US dollars each month with rates ranging from 1.0431 to 1.0552, and expiring on September 10, 2014. Leases The society has entered into operating leases for the use of its Abbotsford premises and office equipment. Under the terms of the leases, the minimum annual lease payments required are:
Year 2014 2015 2016 2017 8.
Operating $ 96,332 $ 96,075 $ 95,562 $ 65,850
INCOME TAXES The society is registered as a charity under the Canada Not-for-profit Corporations Act and extraprovincially under the Society Act of British Columbia. The society is also registered with Canada Revenue Agency as a charitable organization and, as such, is not subject to income taxes.
See accompanying Auditor's Report
11
FH CANADA Notes to Financial Statements For the year ended September 30, 2013
9.
GLOBAL HUNGER FOUNDATION In February 2008 the society gained control of Global Hunger Foundation. This occurred as a result of the majority of Global Hunger Foundation's board of directors also being members of the board of FH Canada. The following financial information of the Global Hunger Foundation has been taken from the society's Registered Charity information Return for the year ending June 30, 2013. There have been no significant events or transactions in the intervening period from July 1, 2013 to September 30, 2013. There are no restrictions on the resources of the controlled entity and there are no significant differences in the accounting policies followed. 2013 Total assets Net assets Total revenue Total expenses
$ $
1,215 $ 1,215 55 $
2012 1,270 1,270 310 125
10. COMPARATIVE FIGURES Comparative figures have been reclassified where necessary to conform to current presentation and accounting framework.
See accompanying Auditor's Report
12