REPORT TO THE BOARD OF GOVERNORS
Agenda Item #2.1
SUBJECT
MEETING DATE
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FIRST QUARTER ENDED JUNE 30, 2015
SEPTEMBER 29, 2015
Forwarded to the Board of Governors on the Recommendation of the President
APPROVED FOR
SUBMISSION
Martha C. Piper, Interim President and Vice-Chancellor
DECISION
REQUESTED
For Information
Report Date
September 2, 2015
Presented By
Andrew Simpson, Vice-President Finance
Ian Burgess, Comptroller
Frances Yip, Director, Financial Reporting
EXECUTIVE SUMMARY
Statement of Operations
A deficit is expected at the end of the first quarter because the majority of tuition revenue is earned in the
last half of the fiscal year when the main Winter term occurs. Year over year, the deficit from operations
for the first quarter of the year has grown by $6.7 million, from $46.5 million to $53.2 million. The variance
in the deficit is largely attributable to an unrestricted gift of $7 million, which was received in April 2014.
The gift, which was uncommon given its size and lack of donor restrictions, was recognized into income last
year and added to the consolidated operating results in Q1 2014/15.
While the first quarter of fiscal 2015/16 shows a larger deficit in comparison to the same period last year,
the University is still operating within the confines of its budget for the fiscal year. The output from the
most recent financial forecast projects balanced consolidated results from operations, with a $19.0
contingency included in that estimate.
Revenues have decreased by $2.1 million, of which the largest factor was the recognition of the
unrestricted $7 million gift received last year, which was not repeated in the current quarter. In addition,
government grants have decreased by $4.2 million, largely due to lower research activities. Offsetting
these decreases is an increase in income from government business enterprises of $2.7 million and an
increase of $7.2 million in tuition fees.
Expenses have increased by $4.6 million, mostly due to a $7.0 million increase in learning costs, resulting
from an increase in in faculty salaries. Other increases include an increase in scholarships resulting in a $4.9
million increase in student costs. These increases are partially offset by a decrease in research expenses of
$7.7 million and administration costs of $0.9 million.
Template revised: August 2015
Consolidated Financial Statements for the First Quarter Ended June 30, 2015
Statement of Financial Position
Total assets increased year over year by $214.7 million. This is largely due to an increase of $145.2 million
in tangible capital assets, net of related depreciation for the period. The value of endowments increased
$120.1 million, largely due to strong returns in the first nine months of the preceding twelve month period,
while accounts receivable have increased $93.7 million largely due to an increase in UBCPT distributions
receivable and student levies to be received to fund the construction of the new Student Union Building.
Offsetting these increases is a decrease in cash and short term investments of $90.9 million, which is the
result of the timing of vendor payments, and increased capital spending. In addition, there is a decrease in
the investment in government business enterprises of $53.6 million. This is due to UBCPT having declared
distributions payable to UBC therefore drawing down their net asset balance, and therefore UBC’s
investment value as well.
Total liabilities increased by $157.1 million year over year which is attributable to deferred contributions,
which increased $113.6 million due to the increase in the value of endowments. Deferred land lease
revenues increased by $53.5 million which is offset by a decrease in debt of $7.8 million.
These quarterly financial statements are unaudited and while efforts have been made to present the
information in a fair manner, detailed reconciliations and accruals that take place with the audited yearend financial statements are not carried out at the same level for quarterly reporting.
Certain comparative figures have been reclassified or adjusted to provide presentation consistency. The
largest adjustment to the comparative figures pertains to depreciation expense and amortization of
deferred capital contributions. In fiscal 2014/15, changes to the depreciation rates of some asset classes
were implemented but this was not included in the financial statements until the end of the fiscal year. As
a result, the results from the first quarter of 2014/15 have been adjusted to reflect those changes to allow
for more meaningful variance analyses in the current period.
INSTITUTIONAL STRATEGIC PRIORITIES SUPPORTED
☐ Learning
☐ Research
or  Operational
☐ Innovation
☐ Engagement
☐ International
(Internal / External)
DESCRIPTION & UBC is required to prepare and submit unaudited financial reports to the Ministry
RATIONALE of Advanced Education in order to meet the reporting requirements of the Budget
Transparency and Accountability Act. These reports are used in the preparation of
the Province’s quarterly reports.
BENEFITS UBC is ranked amongst the best worldwide and is regarded as a globally
influential university with a reputation for excellence in advanced research and
learning. Ensuring that the quarterly financial reports are prepared in accordance
with the required accounting framework and submitted in a timely manner would
continue to support the University in maintaining its reputation and credibility
with all stakeholders.
Learning, Research,
Financial, Sustainability
& Reputational
RISKS In light of funding constraints and continuing changes to the relevant accounting
standards, it is imperative to ensure that the consolidated financial statements
are prepared in accordance with the required accounting framework. Otherwise it
may result in further financial pressures, restrictions on the University’s ability to
maintain required service levels, negative impacts to the University’s reputation,
in addition to other risks.
Financial, Operational
& Reputational
Page 2
THE UNIVERSITY OF BRITISH COLUMBIA
CONSOLIDATED FINANCIAL STATEMENTS
FIRST QUARTER FISCAL 2015-2016
JUNE 30, 2015
Prepared by:
Frances Yip, Director, Financial Reporting
Contacts:
Frances Yip, Director, Financial Reporting
(604) 822-3584 or frances.yip@ubc.ca
Ian Burgess, Comptroller
(604) 822-3031 or ian.burgess@ubc.ca
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
INDEX
Financial Highlights
3-5
Consolidated Statement of Financial Position
6
Consolidated Statement of Financial Position (Classified Format)
7
Consolidated Statement of Operations and Accumulated Surplus
8
Consolidated Expenses by Object
9
Summary of Significant Donations Received in the Quarter
Information provided to the provincial government is limited to the consolidated statements
(pages 6 and 7) and is presented using the government's template.
10
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
PERIOD IN REVIEW
Consolidated Results of Operations (page 8)
At the end of the first quarter of fiscal 15/16, the deficit is reported at $53.2 million. In
comparison to the same period last year, revenues are down $2.1 million and expenses are up
$4.6 million, resulting in an increase to the deficit of $6.7 million. We expect a deficit at the end
of the first quarter as expenses are generally incurred evenly throughout the year, but the
majority of the revenues do not ramp up until we are closer to the Winter semester. The largest
contributor to this variance is the unrestricted gift of $7 million that was received last year in
April 2014, which added to the consolidated operating results in Q1 2014/15.
Revenues have decreased by $2.1 million, of which the largest contributor is the inclusion of the
unrestricted $7 million gift received last year in Q1 2014/15. In addition, government grants
have decreased by $4.2 million driven by lower research activities and amortization of deferred
capital contributions are lower by $1.4 million, which is the result of less external funding
received for capital projects. These decreases are partially offset by an increase in income from
government business enterprises of $2.7 million resulting from UBCPT's investment valuations
and by an increase of $7.2 million in tuition fees, of which $2.6 million is due to ISI, $1.6
million is due to increased fees from Vantage College and $2.6 million is from the Vancouver
Summer Programs.
Expenses are up $4.6 million, of which the largest driver is due to a $7.0 million increase in
learning costs. This increase is largely driven by an increase in faculty salaries ($2.5 million is
due to an increase in FTE, predominately in the faculties; and $2.6 million is related to progress
through the rank increases). Other increases include a $4.9 million increase in student costs,
driven by an increase in scholarships for graduate students and 4 year fellowships and a $1.3
million increase in facilities costs, due to an increase in capital project management fees. These
increases are offset by a reduction in research related expenses of $7.7 million and in
administration costs of $0.9 million, due to lower activities in the period.
Page 3
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
Decrease vs. Prior Year
Increase vs. Prior Year
Change in Revenues
433,000
431,000
429,000
427,000
425,000
423,000
421,000
419,000
Prior Year
Revenues
Revenue
Non‐government Government grants
and contracts
recognized from
grants, contracts
deferred capital
and donations
contributions
Sales and services Investment income
Income from
government
business
enterprises
Tuition and student
fees
Current Year
Revenues
Decrease vs. Prior Year
Increase vs. Prior Year
Change in Expenses
485,000
483,000
481,000
479,000
477,000
475,000
473,000
471,000
Prior Year Expenses
Research
Administration
Community
engagement
Facilities
Students
Learning
Current Year
Expenses
Page 4
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
PERIOD IN REVIEW
Consolidated Statement of Financial Position (page 6)
Assets increased by $214.7 million compared to the balance at June 30, 2014, of which
financial assets are up $49.3 million and non-financial assets are up $165.4 million.
The increase in tangible capital assets comprises the majority of the increase in total assets
with additions of $145.2 million, net of related depreciation. Endowment investments are up
$120.1 million, of which $100 million is from strong returns in the past 12 months (13.7% in
fiscal 2014/15) and $20 million is from new contributions received during the period. Accounts
receivable increased $93.7 million largely due to an increase in UBCPT distributions receivable
and an increase related to student levies to build the new Student Union Building. These
increases are offset by a decrease in cash and short term investments of $90.9 million largely
due to more vendor payments being made this year and increased spending on capital; and a
decrease in the investment in GBE balance of $53.6 million due to a shift of distributions
receivable to accounts receivable.
Liabilities have increased by $157.1 million in comparison to Q1 2014/15.
Deferred contributions are up $113.6 million largely due to strong endowment investment
returns over the past year. Deferred land lease revenues have increased by $53.5 million as a
result of new land sales generated in the period while deferred capital contributions are down
$1.9 million. Offsetting these increases is a decrease in debt of $7.8 million.
Page 5
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)
(thousands of dollars)
June 30, 2015
Unaudited
FINANCIAL ASSETS
Cash and cash equivalents
$
Accounts receivable
Inventories for resale
Investments
Operating
Endowment (expendable balance)
Investments in government business enterprises
LIABILITIES
Accounts payable and accrued liabilities
Employee future benefits
Deferred contributions
Deferred capital contributions
Deferred land lease revenue
Debt
Net debt
NON-FINANCIAL ASSETS
Capital assets
Investments
Endowment (original contribution)
Inventories held for use
Prepaid expenses
Accumulated surplus
28,573
255,856
6,264
$
56,083
162,187
5,672
Mar 31, 2015
Audited
$
80,364
230,558
7,051
312,787
609,283
14,567
1,227,330
376,214
509,729
68,131
1,178,016
327,980
628,897
11,672
1,286,522
209,938
11,429
834,808
1,394,447
521,458
361,800
3,333,880
210,874
10,846
721,241
1,396,351
467,924
369,581
3,176,817
242,413
11,429
819,824
1,405,548
522,451
365,976
3,367,641
(2,106,550)
(1,998,801)
(2,081,119)
2,879,908
2,734,713
2,910,855
856,030
2,212
5,811
3,743,961
835,505
2,203
6,098
3,578,519
847,887
2,490
7,407
3,768,639
$
1,637,411
$
1,587,457
49,954
1,637,411
Accumulated surplus is comprised of:
Accumulated surplus
Accumulated remeasurement gains
June 30, 2014
Unaudited
$
1,579,718
$
1,543,011
36,707
1,579,718
$
1,687,520
$
1,632,471
55,049
1,687,520
Page 6
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (unaudited)
Presented in Classified Statement of Financial Position Format
(thousands of dollars)
June 30, 2015
Unaudited
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Expendable endowment investments
Inventories for resale
Inventories held for use
Prepaid expenses
$
Long term receivables
Investments
Operating investments
Expendable endowment investments
Endowment investments (original contribution)
Investments in government business enterprises
Capital assets
TOTAL ASSETS
LIABILITIES AND ACCUMULATED SURPLUS
Current Liabilities
Accounts payable and accrued liabilities
Employee future benefits
Deferred contributions
Long term deferred contributions
Deferred capital contributions
Deferred land lease revenue
Debt
Total Liabilities
Accumulated Surplus
Accumulated surplus
Accumulated remeasurement gains
$
TOTAL LIABILITIES AND ACCUMULATED
SURPLUS
28,573
218,023
72,742
6,264
2,212
5,811
333,625
June 30, 2014
Unaudited
$
56,083
125,530
64,110
5,672
2,203
6,098
259,696
Mar 31, 2015
Audited
$
80,364
192,965
38,234
7,051
2,490
7,407
328,511
37,833
36,657
37,593
312,787
536,541
856,030
14,567
2,879,908
4,971,291
376,214
445,619
835,505
68,131
2,734,713
4,756,535
327,980
590,663
847,887
11,672
2,910,855
5,055,161
209,938
11,429
298,267
519,634
210,874
10,846
275,622
497,342
242,413
11,429
229,161
483,003
536,541
1,394,447
521,458
361,800
3,333,880
445,619
1,396,351
467,924
369,581
3,176,817
590,663
1,405,548
522,451
365,976
3,367,641
1,587,457
49,954
1,637,411
1,543,011
36,707
1,579,718
1,632,471
55,049
1,687,520
4,971,291
$
4,756,535
$
5,055,161
Page 7
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED SURPLUS (unaudited)
(thousands of dollars)
Three Months Ended June 30
2015
Revenues
Government grants and contracts
Tuition and student fees
Sales and services
Non-government grants, contracts and donations
Investment income
Income from government business enterprises
Revenue recognized from deferred capital contributions
$
Expenses
Learning
Research
Facilities
Students
Community engagement
Administration
Deficit from operations
External endowment donations
Deficit for the period
Accumulated surplus, beginning of period
Accumulated surplus, end of period
243,882
61,994
54,181
37,126
12,237
3,706
18,613
431,739
2014
$
253,797
99,983
59,640
53,653
10,093
7,728
484,894
$
$
(53,155)
8,141
(45,014)
1,632,471
1,587,457
248,131
54,775
53,926
44,514
11,553
1,007
19,979
433,885
246,777
107,698
58,387
48,760
10,170
8,539
480,331
$
$
(46,446)
6,180
(40,266)
1,583,277
1,543,011
Page 8
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
ADDITIONAL INFORMATION (unaudited)
(thousands of dollars)
Three Months Ended June 30
2015
2014
Expenses (by object)
Salaries
$
287,002 $
280,074
Employee benefits
45,471
44,174
Supplies and sundries
36,643
37,968
Amortization
44,437
44,993
Cost of goods sold
Scholarships, fellowships and bursaries
Travel and field trips
Professional and consulting fees
Grants and reimbursements to other agencies
Utilities
Interest on long-term debt
6,034
5,712
16,590
13,203
8,620
8,604
7,305
7,942
21,006
25,186
6,577
7,155
5,210
$
484,894
5,320
$
480,331
Page 9
FIRST QUARTER FISCAL 2015-2016
Audit Committee Report for the three months ended June 30, 2015
SIGNIFICANT DONATIONS RECEIVED IN THE QUARTER
This section is intended to highlight some of the major donations during the past quarter. The highlighted transactions in most
cases represent significant effort and are accomplishments that are worthy of mention. It should be noted that a significant
number of smaller transactions are not highlighted although their academic value may be significant.
Significant gifts (over $200,000) for Q1 15/16 are as follows:
$'000
-
MOA Masterworks Gallery
Science Expectancy Fund
Organic Brain Disease and Virology Research Endowment
Transportation Futures for BC
Traumatic Brain Injury Research
Nursing Expectancy Fund
Homestead Food Production for Improved Nutrition in Cambodia
Nephrology Initiative Fund
Medicine Expectancy Fund
Museum of Anthropology
Music Expectancy Fund
School of Community and Regional Planning
-
Undesignated gift
Canadian Queen Elizabeth II Diamond Jubilee Scholarships
Wellington Lab Equipment
Ophthalmology
Middle Years Development Instrument
3,000
2,300
1,920
1,575
1,484
1,200
1,178
1,000
1,650
672
600
500
500
498
301
297
225
Page 10