Download - 2015 Audited Financials
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
Financial Statements For the period ended June 30, 2015
DRAFT for discussion purposes only
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
Financial Statements For the period ended June 30, 2015
Contents Page
Independent Auditor's Report 3
Statement of Financial Position 5
Statement of Operations and Changes in Fund Balances 6
Statement of Cash Flows 7
Notes to Financial Statements 8
Schedule 1 - Opening Statement of Financial Position 15
Schedule 2 - Statement of Financial Position of 16
Ontario Association of Christian Schools Foundation
as at June 26, 2015
DRAFT for discussion purposes only 2
Independent Auditor's ReportGrant Thornton LLP
5026 King StreetBeamsville, ONL0R 1B0
T +1 905 563 4528F +1 905 563 7780www.GrantThornton.ca
To the Board of Directors of Christian School Foundation (Canada) Inc.
We have audited the accompanying financial statements of Christian School Foundation(Canada) Inc., which comprise the statement of financial position as at June 30, 2015, and thestatements of operations and changes in fund balances and cash flows for the period thenended, and 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 financialstatements in accordance with Canadian accounting standards for not-for-profit organizations,and for such internal control as management determines is necessary to enable the preparationof 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. Weconducted our audit in accordance with Canadian generally accepted auditing standards. Thosestandards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the foundation's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of thefoundation's internal control. An audit also includes evaluating the appropriateness ofaccounting 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 abasis for our qualified audit opinion.
Audit • Tax • AdvisoryGrant Thornton LLP. A Canadian Member of Grant Thornton International Ltd 3
Independent Auditor's Report (continued)
Basis for qualified opinion
In common with many charitable organizations, Christian School Foundation (Canada) Inc.derives revenue from donations the completeness of which is not susceptible to satisfactoryaudit verification. Accordingly our verification of these revenues was limited to the amountsrecorded in the records of Christian School Foundation (Canada) Inc. and we were not able todetermine whether any adjustments might be necessary to donation revenue, excess of revenuesover expenses, changes in fund balances, and cash flows from operations for the period endedJune 30, 2015.
As set out in Note 1 the Foundation was founded on July 18, 2014 as a result of the merger ofthree predecessor foundations. The opening statement of financial position of the Foundation,as at that date was not audited. We are unable to determine the affect, if any, of anymisstatements in the opening statement of financial position on the statement of operationsand cash flows for the period ending June 30, 2015.
Qualified opinion
In our opinion, except for the possible effects of the matter described in the Basis for qualifiedopinion paragraphs, these financial statements present fairly, in all material respects, thefinancial position of Christian School Foundation (Canada) Inc. as at June 30, 2015 and theresults of its operations, changes in fund balances and its cash flows for the period then endedin accordance with Canadian accounting standards for not-for-profit organizations.
Beamsville, Canada Chartered AccountantsLicensed Public Accountants
Audit • Tax • AdvisoryGrant Thornton LLP. A Canadian Member of Grant Thornton International Ltd 4
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
Statement of Financial Position
June 30, 2015 July 18, 2014
(unaudited)
(Note 1)
ASSETS
Current assets
Cash and cash equivalents 226,179$ 116,518$
Accounts receivable 10,835 22,401
Prepaid expenses 1,673 -
238,687 138,919
Capital assets (Note 4) 932,172 1,087
Cash surrender value of life insurance (Note 5) 83,722 79,654
Investments (Note 6) 3,792,898 3,582,480
5,047,479$ 3,802,140$
LIABILITIES AND EQUITY FUNDS
Current liabilities
Accounts payable and accrued liabilities 60,213$ 52,112$
Unearned rent 10,012 -
70,225 52,112
Callable debt scheduled to be paid after one year (Note 7) 550,000 -
620,225 52,112
Net assets
Unrestricted Fund 146,060 29,226
Internally Restricted Funds -
General Reserve Fund 175,783 119,965
Capital Assets Fund 193,837 1,087
Restructuring Fund - 48,237
Curriculum Development Fund 184,654 -
Scholarship Fund 3,680 -
Externally Restricted Funds 3,723,240 3,551,513
4,427,254 3,750,028
5,047,479$ 3,802,140$
On behalf of the Board of Directors:
Chair Director
DRAFT for discussion purposes only See accompanying notes and schedules to the financial statements 5
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
Statement of Operations and Changes in Fund Balances
For the period July 18, 2014 to June 30, 2015
Unrestricted Externally Total
Fund RestrictedGeneral Capital Restructuring Curriculum Scholarship FundsReserve Assets Development
Revenues
Donations - seed funding 294,500 - - - - - - 294,500
Donations - other gifts 44,498 67,447 - - - - 399,792 511,737
338,998 67,447 - - - - 399,792 806,237
Revenues from member schools
Membership fees 22,776 - - - - - - 22,776
Management fees 21,361 - - - - - - 21,361
Other fees 6,248 - - - - - - 6,248
50,385 - - - - - - 50,385
Investment income - 9,491 - - - - 218,532 228,023
RDA investor pool income 12,401 - - - - - 11,752 24,153
Interest 936 - - - - - - 936
402,720 76,938 - - - - 630,076 1,109,734
Expenses
Salaries, contract positions and benefits 198,555 - - - - - - 198,555
Office 18,505 - - - - - - 18,505
Communications 11,299 - - - - - - 11,299
Investment administration fees - 1,120 53,562 54,682
Consulting 22,537 - - - - - - 22,537
Fund development 15,149 - - - - - - 15,149
Legal and audit 17,982 - - - - - - 17,982
Membership fees 6,292 - - - - - - 6,292
Rent 7,680 - - - - - - 7,680
Promotion 7,599 - - - - - - 7,599
Amortization - - 447 - - - - 447
305,598 1,120 447 - - - 53,562 360,727
Excess (deficiency) of Revenues over Expenses 97,122 75,818 (447) - - - 576,514 749,007
before Other Receipts (Disbursements)
Other Receipts (Disbursements)
Net assets (liabilities) received (assumed) on combination with
Ontario Association of Christian Schools Foundation (Note 2) (12,158) - 184,291 - 184,654 3,680 - 360,467
Donations to member schools - - - - - - (403,287) (403,287)
Donations to other charities (27,461) - - - - - (1,500) (28,961)
Excess of Revenues over Expenses 57,503 75,818 183,844 - 184,654 3,680 171,727 677,226
Fund balances, beginning of period 29,226 119,965 1,087 48,237 - - 3,551,513 3,750,028
Transfers between funds (Note 8) 59,331 (20,000) 8,906 (48,237) - - - -
Fund balances, end of period 146,060 175,783 193,837 - 184,654 3,680 3,723,240 4,427,254
DRAFT for discussion purposes only See accompanying notes and schedules to the financial statements 6
Internally Restricted Funds
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
Statement of Cash Flows
For the period July 18, 2014 to June 30, 2015
Operating Activities
Excess of revenue over expenses 677,226$
Items not affecting cash:
Amortization of capital assets 447
Net assets assumed from OACSF (Note 2) , net of
cash included in assets assumed and land transfer tax paid (357,548)
Increase in cash surrender value of life insurance (4,068)
316,057
Changes in non-cash working capital items, net of affects of combinations:
Accounts receivable 11,644
Prepaid expenses (1,673)
Accounts payable and accrued liabilities (4,518)
5,453
Cash flow from operating activities 321,510
Investing Activities
Purchase of capital assets (1,431)
Investments (210,418)
Cash flow from (used by) investing activities (211,849)
Increase in cash 109,661
Cash - beginning of period 116,518
Cash - end of period 226,179$
DRAFT for discussion purposes only See accompanying notes and schedules to the financial statements 7
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 8
1. FORMATION OF CHRISTIAN SCHOOL FOUNDATION (CANADA) INC.
The Christian School Foundation (Canada) Inc. (the Foundation) was established on July 17, 2014 by way of
formal amalgamation of three predecessor foundations, the Central Ontario Christian Education
Foundation (COCEF), the Foundation for Niagara & Hamilton area Christian Schools (FNHCS) and the Grand
River Advancement of Christian Education (GRACE) Foundation. The Foundation is incorporated under
the Canada Corporations Act as a not-for-profit organization, and is registered as a public charitable
foundation under the Income Tax Act and, accordingly, is not subject to income taxes.
The vision of the Foundation is to make Christian education excellent and accessible for everyone who
wants it. The purpose of the Foundation is to receive and maintain funds and to apply these funds and the
investment income earned thereon to member independent Christian schools and their affiliated
organizations that are also registered charities under the Income Tax Act, to advance Christian education.
The Foundation currently consists of 24 member schools in the Province of Ontario, and is governed by a
board of directors which includes a representative director from each member school, plus four at-large
directors.
Canadian generally accepted accounting principles for not for profit organizations, as set out in Part III of
the CPA Canada Handbook (“the Handbook”), do not address combinations of not for profit organizations.
Section 1101 of Part III of the Handbook recommends that when the Handbook does not contain guidance
on a particular accounting issue, the organization should consider applying guidance contained in
secondary sources of generally accepted accounting principles (GAAP), including, if appropriate, guidance
issued by accounting bodies in other jurisdictions. The Foundation has elected to apply the principles set
out in Topic 985-805 of the United States’ Financial Accounting Standard Board (FASB) Accounting
Standards Codification (“the Codification”). In determining that it is appropriate to apply Topic 985-805 of
the Codification, the Foundation determined that the guidance contained therein met the criteria set out in
Section 1101 for applying secondary sources of GAAP.
Topic 985-805 of the Codification classifies combinations as either mergers or acquisitions. A merger is a
combination in which the governing bodies of two or more not-for-profit entities cede control of those
entities to create a new not-for-profit entity. An acquisition is a combination in which a not-for-profit
acquirer obtains control of one or more non-profit activities or businesses. The Foundation has determined
that the combination of FNCHS, GRACE and COCEF was a merger. Accordingly, as prescribed by Topic 985-
805 of the Codification, these financial statements have been prepared by applying the “carryover method”
under which the combined entity’s initial financial statements carry forward the assets and liabilities of the
combining entities at their carrying amount. See Schedule 1 for the unaudited opening Statement of
Financial Position of the Foundation as at July 18, 2014.
2. COMBINATION WITH ONTARIO ASSOCIATION OF CHRISTIAN SCHOOLS FOUNDATION
On June 26, 2015, the Foundation concluded a merger agreement with the Ontario Association of Christian
Schools Foundation (OACSF). OACSF was established in 2005 as a registered charity under the Income Tax
Act to promote Christian education, provide educational support programs to Christian schools and to
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 9
establish a fund to assist Christian schools. Under the terms of the agreement between the Foundation
and OACSF, the assets, liabilities, obligations and operations of OACSF have been assumed by the
Foundation, and OACSF will be dissolved. Applying the principals of Topic 985-805 of the FASB Accounting
Standards Codification (See Note 1), the Foundation has determined that this combination is an acquisition
for accounting purposes. Accordingly, as prescribed by Topic 985-805 this combination has been recorded
by applying the “acquisition method”, under which the assets and liabilities of OASCF have been recognized
by the Foundation at their fair value and the variance between them has been recognized as a contribution
received. See Schedule 2 for the Statement of Financial Position of OACSF as at June 26, 2015.
As at June 26, 2015, OACSF did not have sufficient cash or marketable securities to enable it to pay for
$188,334 of anticipated curriculum development and scholarship activities in accordance with the
corresponding internally restricted funds it had established for these purposes. OACSF intended to finance
these activities from a future sale of its land and buildings. Similarly, it is the intention of the Foundation to
fund these amounts from the net proceeds of the future sale of the land and buildings after repayment of
related debts and expenses. Should the net proceeds be insufficient to fund the full amount of these
internally restricted funds, the internally restricted funds will be reduced accordingly.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These financial statements have been prepared using Canadian accounting standards for not-for-profit
organizations.
Fund accounting
The Foundation has established the following funds to account for and to report on separate activities or
objectives of the Foundation.
Unrestricted Fund
All revenues, expenditures, assets and liabilities relating the day to day operations of the Foundation
are reported in the Foundation’s Unrestricted Fund.
Internally Restricted Funds
General Reserve Fund
From time to time, the Foundation receives donations intended to ensure the long-term viability
of operations, or donations received with no purpose specified. The Foundation maintains these
funds in a general reserve, using them to fund operations as required form time to time, at the
discretion of the Board of Directors.
Capital Assets Fund
The Capital Assets Fund reports the assets, liabilities, revenues and expenses related to the
Foundation’s capital assets.
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 10
Restructuring Fund
The Restructuring Fund was established in 2014 to complete the merger referred to in Note 1.
With the merger completed as of the start of this current fiscal period, the Restructuring Fund was
wound up in to the Unrestricted Fund.
Curriculum Development Fund
The Curriculum Development Fund was assumed as part of the combination with OACSF (Note 2),
and is intended to fund programs and activities related to developing learning materials for
Christian schools.
Scholarship Fund
The Scholarship Fund was also assumed as part of the combination with OACSF (Note 2), and is
intended for financial assistance to students and teachers of Christian schools.
Externally Restricted Funds
Resources contributed to the Foundation for the benefit of member schools are reported as externally
restricted funds. The Foundation maintains funds for a variety of purposes, according to the wishes of
donors. Certain funds are designated as benefiting specific member schools, while others are
designated as benefiting all member schools. Investment income earned on externally restricted funds
is reported as revenue of those funds.
Revenue recognition
The Foundation uses the restricted fund method of accounting for revenue. Under this method
contributions designated for the benefit of one or more member schools and investment income earned
on such funds are recognized as revenue of the Externally Restricted Funds. Unrestricted contributions,
membership fees and investment income earned on unrestricted funds are recognized as revenue of the
Unrestricted Fund. Donations received for a specific purpose for which an externally restricted fund has
not been established are recognized as revenue when the funds have been expended on the purpose
specified.
Unrestricted and restricted fund contributions, revenues from member schools and other income are
recognized as revenue when received or receivable, if the amount to be received can be reasonably
estimated and collection is reasonably assured.
Donations in-kind consist of life insurance policies and marketable securities. The donation of a life
insurance policy is recognized as revenue in the period in which legal ownership of the policy is transferred
to the Foundation, in the amount of the cash surrender value at that time. Subsequent changes in the
cash surrender value are recognized annually as they occur. Donations of marketable securities are
recognized as revenue in the period in which the Foundation receives the securities, based on the quoted
market value of the securities at that time.
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 11
Capital assets
Capital assets are stated at cost less accumulated amortization. Capital assets are amortized over their
estimated useful lives at the following rates and methods:
Computer equipment 3 years straight-line method
Furniture and fixtures 5 years straight-line method
Building 40 years straight-line method
Amortization expense is reported in the Capital Asset Fund.
The Foundation tests for impairment whenever events or changes in circumstances indicate the carrying
amount of an item of property, plant and equipment may not be recoverable. The recoverability of long-
lived assets is based on the net recoverable amounts determined on an undiscounted cash flow basis. If
the carrying amount of an asset exceeds its net recoverable amount, an impairment loss is recognized to
the extent that fair value is below the asset's carrying amount. Fair value is determined based on quoted
market prices when available, otherwise on discounted cash flows over the life of the asset.
Use of Estimates
The preparation of financial statements in accordance with Canadian accounting standards for not-for-
profit organizations requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenditures for the year. Actual results
could differ from those estimates as additional information becomes available in the future.
These estimates are reviewed periodically and adjustments are made to net income as appropriate in the
year they become known.
Items subject to significant management estimate include the estimated useful life of capital assets.
Financial instruments
The Foundation initially measures its financial assets and liabilities at fair value.
The Foundation subsequently measures all its financial assets at amortized cost, except for investments in
equity instruments that are quoted in an active market which are measured at fair value and investments
in equity instruments that are not quoted in an active market which are measured at cost less any
reduction for impairment. Changes in fair value are recognized in net income.
Financial assets and liabilities measured at amortized cost include cash, accounts receivable, investments,
accounts payable and accrued liabilities, and mortgage payable.
Financial assets measured at cost are tested for impairment when there are indicators of impairment.
Previously recognized impairment losses are reversed to the extent of the improvement provided the
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 12
asset is not carried at an amount, at the date of the reversal, greater than the amount that would have
been the carrying amount had no impairment loss been recognized previously. The amounts of any write-
downs or reversals are recognized in net income.
4. CAPITAL ASSETS
5. CASH SURRENDER VALUE ON LIFE INSURANCE
The Foundation is the assignee and owner of life insurance policies with death benefits totalling $412,000
and cash surrender values totalling of $83,722. The cash surrender value of these policies has been
included in these financial statements.
6. INVESTMENTS
All of the Foundation’s investments are currently held under Revocable Deposit Agreements (RDA’s) with
Christian Stewardship Services (CSS). CSS is a registered charity under the Income Tax Act, and is a certified
member of the Canadian Council of Christian Charities. CSS promotes Christian principles of giving and
stewardship, and serves as an investment portfolio manager which provides mortgages to qualified
Christian organizations and manages funds on behalf of investors.
The Foundation’s RDA’s are held within a restricted portfolio maintained by CSS. Investment income
earned thereon, less an administration fee, is credited to the Foundation’s account on a monthly basis.
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 13
7. CALLABLE DEBT
As a result of its combination with OACSF (Note 2), the Foundation has assumed the mortgage that OACSF
had used to finance its land and buildings.
June 30, 2015
CRC Community Retirement Savings Plan mortgage, interest
adjusted quarterly, current interest rate of 3%, interest only
payable monthly. $550,000
The mortgage matures on March 31, 2020. During the term of the mortgage, there are no scheduled
principal payments. The Foundation may make principal payments at any time, in increments of $1,000.
However, the lender has the right to demand payment at any time with 75 days’ notice. Accordingly,
although no principal payments are scheduled or anticipated in the next fiscal year, the mortgage is
classified as a current liability.
The mortgage is secured by the land and buildings which have a net book value of $925,000.
8. TRANSFERS BETWEEN FUNDS
Transfers between funds represent reallocations of funds between the various funds the Foundation
maintains to account for its separate activities or objectives. In the current year $48,237 was transferred
from the Restructuring Fund to the Unrestricted Fund to cover initial start-up costs for the Foundation,
$8,906 was transferred to the Capital Asset Fund from the Unrestricted Fund to cover the cost of capital
asset purchases in the current year and the cost of the land transfer tax on the acquisition of the land from
OACSF, and $20,000 was transferred to the Unrestricted Fund from the General Reserve Fund to finance
operating expenses.
9. FINANCIAL INSTRUMENT RISKS
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Foundation is exposed to interest rate risk arising from
the possibility that changes in interest rates will affect the value of fixed income denominated investments
held within its restricted portfolio maintained by CSS. The Foundation is also exposed to interest rate risk
from the possibility that the interest rate on its’ long term debt may change, since it can be adjusted
quarterly. However, the rate has not changed for several years. There was no significant change in the
Foundation’s exposure to interest rate risk in the period.
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Notes to Financial Statements Period Ended June 30, 2015
DRAFT FOR DISCUSSION PURPOSES ONLY 14
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Foundation is exposed to currency rate risk arising from
foreign equities and other investments held within its restricted portfolio maintained by CSS. The risk is
mitigated by the relatively low exposure to foreign investments within the restricted portfolio.
Market risk
Market risk is the risk that the fair value or future cash flows from investments will decline because of
changes in market prices or other factors affecting the value of the investments. There was no significant
change in the Foundation’s exposure to market risk in the period.
Liquidity risk
Liquidity risk is the risk that the Foundation will encounter difficulty in meeting a demand for cash or fund
its obligations as they come due. The rental income on the land and buildings is currently sufficient to
cover all or substantially all of the operating costs and principal repayments related to the land and
buildings. All of the Foundation’s investments are held under RDA’s with CSS, which can generally be
withdrawn in 30 to 90 days.
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Schedule 1
Unaudited Opening Statement of Financial Position
As at July 18, 2014
Christian
FNHCS GRACE COCEF School
Foundation
ASSETS (Canada) Inc.
Current assets
Cash 91,823$ 19,245$ 5,450$ 116,518$
Accounts receivable 21,712 - 689 22,401
113,535 19,245 6,139 138,919
Capital assets 1,087 - - 1,087
Cash surrender value of life insurance 61,606 - 18,048 79,654
Investments 2,149,342 415,209 1,017,929 3,582,480
2,325,570$ 434,454$ 1,042,116$ 3,802,140$
LIABILITIES AND EQUITY FUNDS
Current liabilities
Accounts payable and accrued
liabilities 48,315$ -$ 3,797$ 52,112$
Equity Funds
Unrestricted 7,639 19,245 2,342 29,226
Internally restricted -
General Reserve 119,965 - - 119,965
Capital Assets 1,087 - - 1,087
Restructuring Fund 48,237 - - 48,237
Externally restricted 2,100,327 415,209 1,035,977 3,551,513
2,277,255 434,454 1,038,319 3,750,028
2,325,570$ 434,454$ 1,042,116$ 3,802,140$
DRAFT for discussion purposes only 15
CHRISTIAN SCHOOL FOUNDATION (CANADA) INC. Schedule 2
Statement of Financial Position of
Ontario Association of Christian Schools Foundation
As at June 26, 2015
ASSETS
Current assets
Cash 10,394$
Accounts receivable 79
10,473
Capital assets 930,100
940,573$
LIABILITIES AND EQUITY FUNDS
Current liabilities
Accounts payable and accrued liabilities 12,619$
Unearned rent 10,012
22,631
Callable debt scheduled to be paid after one year 550,000
572,631
Equity Funds
Unrestricted - General Fund (12,158)
Internally restricted funds
Curriculum Development 184,654
Scholarship 3,680
Capital Assets 191,766
367,942
940,573$
DRAFT for discussion purposes only 16