Financial Statements of
DOCTORS WITHOUT BORDERS CANADA/MÉDECINS SANS FRONTIÈRES CANADA Year ended December 31, 2010
KPMG LLP
Chartered Accountants Yonge Corporate Centre 4100 Yonge Street Suite 200 Toronto ON M2P 2H3 Canada
Telephone Fax Internet
(416) 228-7000 (416) 228-7123 www.kpmg.ca
INDEPENDENT AUDITORS' REPORT To the Members of Doctors Without Borders Canada/ Médecins Sans Frontières Canada Report on the Financial Statements We have audited the accompanying financial statements of Doctors Without Borders Canada/Médecins Sans Frontières Canada, which comprise the statement of financial position as at December 31, 2010, the statements of operations, changes in net assets and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian 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. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.
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Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Doctors Without Borders Canada/MÊdecins Sans Frontières Canada as at December 31, 2010, and its results of operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Report on Other Legal and Regulatory Requirements As required by the Corporations Act (Ontario), we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.
Chartered Accountants, Licensed Public Accountants April 21, 2011 Toronto, Canada
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA (Incorporated under the laws of Canada) Statement of Financial Position December 31, 2010, with comparative figures for 2009 2010
2009
$ 13,525,675 47,915 2,392,273 203,164 16,169,027
$ 7,768,414 22,448 1,572,864 324,429 9,688,155
58,770
95,972
$ 16,227,797
$ 9,784,127
$
6,981,929
$ 6,316,625
58,770 9,187,098 9,245,868
95,972 3,371,530 3,467,502
$ 16,227,797
$ 9,784,127
Assets Current assets: Cash and cash equivalents (note 2) Investments (note 3) Accounts receivable (note 4) Prepaid expenses
Capital assets (note 5)
Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities (note 6) Net assets: Invested in capital assets Unrestricted
Commitments (note 12) Contingencies (note 13)
See accompanying notes to financial statements. On behalf of the Board: Director Director
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Statement of Operations Year ended December 31, 2010, with comparative figures for 2009
Revenue: Donations Support from Canadian International Development Agency (note 9) Grants from other MSF sections Interest Other
2010
2009
$ 43,034,162
$ 22,968,026
4,500,000 3,499,238 109,285 53,190 51,195,875
5,175,000 2,433,869 33,715 115,309 30,725,919
30,441,329 5,489,476 1,176,072 37,106,877
18,940,597 4,477,576 943,554 24,361,727
6,947,510 1,363,122 8,310,632 45,417,509
5,140,408 1,252,850 6,393,258 30,754,985
Expenses (note 11): Program services: Emergency, medical, nutrition and health projects (notes 9 and 10) Program support and development Public education
Supporting services: Fundraising Management and general
Excess of revenue over expenses (expenses over revenue)
$
See accompanying notes to financial statements.
2
5,778,366
$
(29,066)
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Changes in Net Assets Year ended December 31, 2010, with comparative figures for 2009
Unrestricted Net assets, beginning of year Excess of revenue over expenses (expenses over revenue) Purchase of capital assets Net assets, end of year
$ 3,371,530
$
5,841,935
See accompanying notes to financial statements.
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2009
Total
Total
95,972
$ 3,467,502
$ 3,496,568
(63,569)
(26,367) $ 9,187,098
2010 Invested in capital assets
$
5,778,366
(29,066)
26,367
–
–
58,770
$ 9,245,868
$ 3,467,502
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Cash Flows Year ended December 31, 2010, with comparative figures for 2009 2010
2009
Cash provided by (used in): Operating activities: Excess of revenue over expenses (expenses over revenue) Amortization of capital assets which does not involve cash Change in non-cash operating working capital: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities
Investing activities: Purchase of investments, net Purchase of capital assets
$
5,778,366 63,569
$
(29,066) 140,928
(819,409) 121,265 665,304 5,809,095
594,752 (165,451) 140,632 681,795
(25,467) (26,367) (51,834)
(2,220) (51,136) (53,356)
Increase in cash and cash equivalents
5,757,261
628,439
Cash and cash equivalents, beginning of year
7,768,414
7,139,975
$ 13,525,675
$ 7,768,414
Cash and cash equivalents, end of year See accompanying notes to financial statements.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements Year ended December 31, 2010
Doctors Without Borders Canada/Médecins Sans Frontières Canada ("MSF Canada") actively commenced operations on January 1, 1992. MSF Canada offers assistance to populations in distress, victims of natural or man-made disasters and victims of armed conflict, without discrimination and irrespective of race, religion, creed or political affiliation. MSF Canada is a registered charity under the Income Tax Act (Canada) and, while registered, is exempt from income taxes. 1.
Significant accounting policies: These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The significant accounting policies are summarized as follows: (a) Financial instruments: All financial instruments are classified as either held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale or other financial liabilities. Financial instruments classified as held-for-trading are measured at fair value with unrealized gains and losses recognized in the statement of operations. Financial instruments classified as held-to-maturity investments, loans and receivables and other liabilities are measured at amortized cost. Financial instruments classified as available-for-sale are measured at fair value with the unrealized gains and losses recognized in the statement of changes in net assets. MSF Canada designated its cash and cash equivalents and investments as held-fortrading, which are measured at fair value, accounts receivable as loans and receivables, which are measured at amortized cost, and accounts payable and accrued liabilities as other financial liabilities, which are measured at amortized cost. Transaction costs that are directly attributable to the acquisition of investments are not considered significant and are expensed when paid. Investment purchase and sale transactions are accounted for on the trade date.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
1.
Significant accounting policies (continued): (b) Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and short-term investments with original maturities of less than 90 days. (c) Capital assets: Capital assets consist of office equipment, furnishings and leasehold improvements. These costs are capitalized and amortized on a straight-line basis using an estimated useful life of three years. (d) Revenue recognition: MSF Canada follows the deferral method of accounting for contributions. Unrestricted contributions are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Donations are recognized on a cash basis since pledges are not legally enforceable claims. Externally restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Interest income is recognized as revenue on an accrual basis. Grants from other MSF Canada sections are recognized as revenue when related expenses are incurred or services are provided. (e) Contributed materials and services: Doctors and other volunteers contribute a significant amount of time in support of MSF Canada. As this time cannot be easily valued, contributed services are not recognized in the financial statements. Contributed materials are also not recognized.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
1.
Significant accounting policies (continued): (f) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates.
2.
Cash and cash equivalents:
Cash Money market fund
2010
2009
$ 10,025,669 3,500,006
$ 4,268,408 3,500,006
$ 13,525,675
$ 7,768,414
At December 31, 2010, the money market fund yielded an effective interest rate of 0.41% (2009 - 0.90%). 3.
Investments: 2010 Market value Equities Mutual funds
2009 Cost
Market value
Cost
$
29,837 18,078
$
29,568 17,792
$ 21,942 506
$ 21,996 499
$
47,915
$
47,360
$ 22,448
$ 22,495
Equities represent gifts-in-kind donated at year end and sold subsequent to year end.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
4.
Accounts receivable: 2010 Donations receivable MSF Holland Other MSF organizations Other
5.
$ 1,198,479 242,386 817,418 133,990
$
840,427 281,275 369,141 82,021
$ 2,392,273
$ 1,572,864
Cost
Accumulated amortization
2010 Net book value
2009 Net book value
$ 422,321 78,044 262,746
$ 393,501 64,960 245,880
$ 28,820 13,084 16,866
$ 40,958 17,963 37,051
$ 763,111
$ 704,341
$ 58,770
$ 95,972
Capital assets:
Office equipment Furnishings Leasehold improvements
6.
2009
Accounts payable and accrued liabilities: Included in accounts payable and accrued liabilities is $6,222,018 (2009 - $5,503,472) in amounts owing to other MSF organizations, relating to shared grants and program expenditures.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
7.
Financial instruments: (a) Investment risk management: Investments are primarily exposed to interest rate and market risk. MSF Canada has formal policies and procedures that address risk mitigation. (b) Fair values: The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these financial instruments. The fair values of investments are based on quoted market values, as disclosed in note 3. (c) Interest rate risk: Interest rate risk arises from the possibility that changes in interest rates will affect the value of fixed income securities held by MSF Canada. MSF Canada manages this risk by holding guaranteed investment certificates and by staggering the terms of the securities held. (d) Market risk: Market risk arises as a result of receiving donated securities. Fluctuations in the market expose MSF Canada to a risk of loss. MSF Canada mitigates its own market risk through investing in guaranteed investment certificates.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
8.
Capital management: In managing capital, MSF Canada focuses on liquid resources available for operations. MSF Canada's objective is to have sufficient liquid resources to continue operating and to provide it with the flexibility to have funds available to respond to international humanitarian medical emergencies. The need for sufficient liquid resources is considered in the preparation of an annual budget and in the monitoring of cash flows and actual operating results compared to budget.
9.
Canadian International Development Agency: MSF Canada solicits funds for projects being undertaken by MSF worldwide from Canadian International Development Agency ("CIDA"). CIDA funds a number of these projects and grants the funding to MSF Canada. MSF Canada retains 5% (2009 - 5%) of the CIDA funds to cover its project coordination, administration and overhead costs. MSF Canada enters into an agency agreement with the operational MSF section that will carry out the project and passes on the CIDA funds to that section. At the conclusion of the project, the operational section accounts for the funds to MSF Canada. MSF Canada reviews these accounts and presents them to CIDA. To the extent that the funds are not fully spent, they are returned by the operational section to MSF Canada and by MSF Canada to CIDA.
New grants recognized as revenue
Grants disbursed by country: Democratic Republic of Congo Ethiopia - Somali region Chad Central African Republic Zimbabwe Niger Myanmar (Burma) Sri Lanka Sudan
2010
2009
$ 4,500,000
$ 5,175,000
$
$
855,000 855,000 760,000 665,000 475,000 427,500 237,500 – –
$ 4,275,000
10
– – 1,140,000 950,000 475,000 – – 1,116,250 1,235,000
$ 4,916,250
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
9.
Canadian International Development Agency (continued): The grants disbursed are included in program services expenses - emergency and medical projects. For the year ended December 31, 2010, the difference between new grants recognized as revenue and grants disbursed represents project coordination, administration and overhead expenses totalling $225,000 (2009 - $258,750).
10.
Emergency, medical, nutrition and health projects by country: 2010 Projects funded by CIDA (note 9) Haiti (2010 earthquake) Democratic Republic of Congo Somali South Sudan Colombia Nigeria Zimbabwe Niger Pakistan Guinea Myanmar Papua New Guinea Caucasus - Russia Sudan (Darfur) Kenya Other: Access to essential medicines campaign and Drugs for Neglected Diseases Initiative and Innovation Fund Other direct field costs
11
$
4,275,000 13,730,898 2,799,000 2,400,000 1,600,000 1,000,000 1,000,000 1,000,000 900,000 820,000 410,000 – – – – –
2009 $
4,916,250 500,000 2,500,000 2,150,000 500,000 1,000,000 – 500,000 1,016,000 712,760 1,370,000 500,000 500,000 1,000,000 1,000,000 143,335
366,719 139,712
243,094 389,158
$ 30,441,329
$ 18,940,597
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
11.
Expenses: MSF Canada classifies expenses on the statement of operations by function ("Program"). The entity allocates certain costs by identifying the appropriate basis of allocation and applying that basis consistently each year. These costs are prescribed by the MSF International Accounting Standards ("MSF IAS"), developed and accepted by all MSF Sections for the purpose of producing recombined financial statements that are separately audited and certified. Allocated expenses and the basis of allocation are as follows: Common costs: Administration costs, as prescribed by MSF IAS, that are not clearly assignable to a specific program are grouped as common costs and reallocated to each Program on a consistent basis. The basis of allocation is an estimate of the percentage of usage of each Program according to space and staff numbers. Common costs of $1,015,389 (2009 - $871,205) were allocated as follows: Allocation key Program services: Program support and development: Operating cell Human resources department Program unit Public development: Communications department Fundraising department Management, general and administration
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10% 25% 5% 15% 25% 20%
2010
$
101,539 253,847 50,770
2009
$
87,121 217,801 43,560
152,308 253,847 203,078
130,681 217,801 174,241
$ 1,015,389
$ 871,205
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2010
12.
Commitments: MSF Canada has commitments for its leased premises and equipment. The future minimum annual lease payments under operating leases are as follows:
2011 2012 2013 2014 2015 Thereafter
$ 122,160 124,106 124,233 122,154 126,820 74,415 $ 693,888
13.
Contingencies: MSF Canada is involved in various legal actions that are normal to its business. In the opinion of management, any resulting liabilities are not expected to have a material adverse effect on the financial position or net operations.
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