4.3e
AGENDA ITEM NO •._ __
THE UNIVERSITY OF BRITISH COLUMBIA
FOR INFORMATION ONLY
FORWARDED TO:
BOARD OF GOVERNORS ON
RECOMMENDATION
OF PRESIDENT STEPHEN J. TOOPE
APPROVED FOR SUBMISSION:
DATE
PRESENTED BY:
Operatio~
Pierre Ouillet, Vice President, Finance, Resources &
Barbara Miles, Vice Preside9-f, Deve~p~ent & Alumni Engag
Ian Burgess, Comptroller ~
Q
DATE OF MEETING:
November 22, 2011
SUBJECT:
The University of British Columbia Foundation Financial
Statements March 31, 2011
DECISION REQUESTED:
For information only
EXECUTIVE SUMMARY:
The Board of Directors of the UBC Foundation (the
Foundation) has approved the audited financial
statements for the year ended March 31, 2011. The
financial statements were prepared by the
University and have been audited by KPMG LLP.
The Foundation Financial Statements are included
in the University's Consolidated Financial
Statements.
ATTACHMENTS:
1. The University of British Columbia Foundation Financial Statements Backgrounder
2. The University of British Columbia Foundation Financial Statements March 31, 2011
Attachment 1
THE UNIVERSITY OF BRITISH COLUMBIA
BOARD OF GOVERNORS
mNANCIALSTATEMENTBACKGROUNDER
Financial Statements for:
The University of British Columbia Foundation
Fiscal Years Ended:
March 31, 2011
Membership/Shareholders:
The Minister of Finance and Corporate Relations,
Province of British Columbia
Board of Directors:
C. Warren, Chairman
M. Bentley
J. Pau
Douglas H. Mitchell
Officers:
vacant, President
vacant, Vice-President
I. Burgess, Treasurer
B. Miles, Secretary
Legal Counsel:
R. Carrothers
Relationship to the University:
The Foundation was established as a corporation in 1987 under the University
Foundations Act. Its purpose is to develop public awareness of the University of British
Columbia, and to encourage financial support for the University and its programs.
The Foundation is designated under the Act as an agent of the Crown in right of the
Province of British Columbia.
University Responsibility:
The University maintains the accounting records and manages the day-to-day operations
of the Foundation.
Current Status:
No Change.
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
FINANCIAL STATEMENTS
MARCH 31, 2011
Page
Statement of Management Responsibility
1
Auditor's Report
2
Statement of Financial Position
3
Statement of Operations and Changes in Net Assets
4
Statement of Cash Flows
5
Notes to Financial Statements
6
I•
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
STATEMENT OF MANAGEMENT RESPONSIBILITY
MARCH 31, 2011
The University of British Columbia Foundation (the Foundation) is responsible for the
preparation of the financial statements and has prepared them based on Canadian
generally accepted accounting principles for not-for-profit organizations. The financial
statements present fairly the financial position of the Foundation as at March 31, 2011,
and the results of its operations and the changes in its financial position for the year
then ended.
In fulfilling its responsibilities and recognizing the limits inherent in all systems, the
Foundation has developed and maintains a system of internal control designed to
provide reasonable assurance that Foundation assets are safeguarded from loss and
that the accounting records are a reliable basis for the preparation of financial
statements.
The Foundation Board carries out its responsibility for review of the financial statements
principally through the officers of the Foundation. The officers of the Foundation meet
with management and the external auditors to discuss the results of audit examinations
and financial reporting matters. The external auditors have full access to the officers of
the Foundation, with and without the presence of management.
The financial statements for the year ended March 31, 2011 have been reported on by
KPMG LLP. the auditor appointed by the Foundation Board Members. The Auditor's
Report outlines the scope of his examination and provides his opinion on the fairness of
presentation of the information in the financial statements.
s~
Barbara Miles
Secretary
Treasurer
1
KPMGUP
Chartered Accountants
Metrotower II
Suite 2400 - 4720 Kingsway
Burnaby BC V5H 4N2
Canada
Telephone (604) 527-3600
Fax
(604) 527-3636
Internet
www.kpmg.ca
INDEPENDENT AUDITORS' REPORT
To the Members of the Board of the University of British Columbia Foundation
We have audited the accompanying financial statements of The University of British Columbia
Foundation, which comprise the statement of financial position as at March 31, 2011, 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 opm1on 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.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of The
University of British Columbia Foundation as at March 31, 2011 and its results of operations and its cash
flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Chartered Accountants
September 16, 2011
Burnaby, Canada
KPMG LLP. a Caudian Iunited liabilily par1Del'lhip and a member form of the KPMG
network of indepeodent member firms affiliated wilb KPMG International. a Swiss c:oopcmive,
KPMG Cllllda proVIdes services 10 KPMG LLP,
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31
2010
201"1
ASSETS
Current assets:
Cash
Accounts receivable
$
313,268
615961335
619091603
$
129,333
616201108
6z7491441
Investments
Charitable remainder trust
Investments
Rick Hansen Trust
(Note 3)
(Note4)
(Note 8)
4,313,044
113,594,616
2814631564
14613711224
4,375,121
69,066,713
271521 1432
100,9631266
Cspltal assets
(Note 5)
115001000
154,780,827
115001000
109,212,707
Total assets
$
$
LIABILITIES & NEI ASSETS
Current liabilities:
Accounts payable
Due to the University of British Columbia
(Note 6)
13,500
61901 1168
6,914,668
Net assets:
Share capital
(Note 7)
100
100
28,463,564
113,425,000
115001ooo
143,388,564
27,521,432
68,900,000
115001000
97,921,432
414n1495
415341336
102.455z168
Endowment
Rick Hansen Trust
Peter Wall Endowment
Kay Earle Endowment
$
(Note 8)
(Notes 4 and 9)
(Note 10)
General purpose
Total net assets
14718661059
TotalllabDitles and net assets
$
.._
(See accompanying notes to the financial statements)
1?:~
~~ ~
L
$
~
3
154,780,827
$
13,500
•6z743.339
6,756,839
109,212,707
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31
Endowment
Rick Hansen
Peter Wall
Endowment
Trust
INote 8)
INote 9)
General
Purpose
Revenue:
$
Donations
Investment income (loss)
Transfer from the
University of British Columbia (Note 12)
Expenses:
Grants to the
University of British Columbia
Grants to the
Peter Wall Institute
Grants to the
Rick Hansen Institute
Professional fees
22,438 $
2,561,319
14,984
1,518,976
2,583,757
1,560,833
1,134,118
-
-
-
507,507
-
14,984
Excess (Deficiency) of
revenue over expenses
Net assets, beginning of year
Net assets, end of year
1,560,653 $
(56,661)
$
-
-
52,650,000
8,125,000
-
1,641,625
8,125,000
(56,841)
942,132
44,525,000
4,534,336
27,521,432
68,900,000
-
~-
28,463,564 $
(See accompanying notes to the financial statements)
4
$
52,650,000
1,575,817
4,4?I,495 $
Kay Earle
Endowment
INote 10)
113,425,000 $
-
$
Total
Total
2011
ru!
1,583,091 $
55,205,929
2,776,856
34,665,946
51,271
14,984
56,804,004
44,174
37,4861976
51,271
2,746,222
2,815,712
8,125,000
8,199,817
507,507
14,984
414,698
18,983
11,393,713
11,449,210
45,410,291
26,037,766
1,500,000
102,455,768
76,418,002
_1,50Q,OQQ_ $
147,866,059 $ 102,455,768
51,271
-
51,271
-
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31
Cash provided from (used for):
Operating activities:
Excess of revenue over expenses
$
45,410,291 $
Add: non-cash items
Fair value adjustment on held-for-trading investments
(46,103,133)
Capital assets donated
(2,904)
(Increase) I decrease in cash surrender value of life insurance policies -----lo:=~
26,037,766
(26, 173,862)
(1 ,500,000)
11,736
(695,746)
(1,624,360)
23,773
157,829
(5,586,424)
1,500
5,709,990
181,602
125,066
Investing activities
Change in Rick Hansen Trust investments
698,079
1,251,538
Decrease in cash
183,935
(247,756)
Cash, beginning of year
129,333
377,089
Changes in:
Accounts receivable
Accounts payable
Due to the University of British Columbia
$==========
Cash, end of year
313,268
(See accompanying notes to the financial statements)
5
$
129,333
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31,2011
1. Operations
The Foundation was established as a corporation in 1987 under the University Foundations
Act. Its purpose is to develop public awareness of The University of British Columbia (the
University), and to encourage financial support for the University and its programs.
The Foundation is designated under the Act as an agent of the Crown in right of the Province
• of British Columbia.
2.
Significant Accounting Policies
These financial statements have been prepared by management in accordance with
Canadian generally accepted accounting principles.
a) Fund Accounting
Fund accounting procedures are used in order to organize restrictions placed on the
use of resources by donors or the Board of the Foundation. Separate accounts are
maintained for each fund to facilitate observance of these restrictions.
There are four types of funds within the Foundation: General Purpose, Peter Wall
Endowment, Rick Hansen Trust, and Kay Earle Endowment.
General Purpose Fund This fund reports all unrestricted revenue and restricted
contribution for which no corresponding restricted fund is presented. The fund
balance represents net assets that are not subject to externally imposed restrictions.
Peter Wall Endowment The use of capital and income arising from the Peter Wall
Endowment is restricted by the terms of the Deed of Trust establishing the
Endowment. These terms also impose restrictions on the ability of the Foundation to
transfer or otherwise deal in the shares held in Wall Financial Corporation.
Rick Hansen Trust Income and endowment from the Rick Hansen Trust are used
exclusively for the benefit of the Rick Hansen Institute at the University of British
Columbia.
Kay Earle Endowment The capital and income arising from the Kay Earle
Endowment is restricted by the terms of the Testamentary Trust establishing the
Endowment. These terms also impose restrictions on the ability of the Foundation to
transfer the donated residential property.
b) Revenue Recognition
The Foundation follows the restricted fund method of accounting for contributions
which includes donations. Unrestricted contributions including general donations are
recognized in the General Purpose Fund when received or when receivable if the
amount to be received can be reasonably estimated and collection is reasonably
assured.
Restricted contributions including donations to the Peter Wall Endowment and Rick
Hansen Trust are recognized as revenue in these funds when they are receivable by
the Foundation. Restricted contributions for which there is no corresponding
6
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31,2011
restricted fund is recognized in the General Purpose Fund in accordance with the
deferral method when receivable by the Foundation.
Donations arising from bequests are recognized at the time the assets are
distributed to the Foundation by the Executor.
c) Capital Assets
Donated capital assets from unrelated parties to the Foundation are recorded at fair
value at the date of contribution.
Land is not amortized as it is deemed to have an unlimited useful life.
d) Charitable Remainder Trust
Charitable remainder trust donations are recognized at the time the trust agreement
is executed. The gifts' fair values are determined by discounting the market value of
the trusts to current dollars using an appropriate market rate.
e) Gifts-in-kind
Gifts-in-kind include premiums paid on life insurance policies, artifacts, and other
gifts-in-kinds, and are not recorded In the financial statements.
f)
Investment Income
Investment income includes interest, capital gains and tosses, dividends as declared
and fair value adjustment of investments classified as held-for-trading (HFT).
Investment income is recorded on an accrual basis.
g) Financiallnstruments
Financial instruments are classified as loans and receivables, HFT, or other financial
liabilities. All financial instruments are recognized at fair value on Initial recognition.
Subsequent to initial recognition, financial assets classified or designated as HFT
are recorded at fair value. Gains and losses realized on disposal, unrealized gains
and losses from market fluctuations and other investment income are reported in the
Statement of Operations.
The Foundation's financial Instruments include cash, accounts receivable, charitable
remainder trusts, investments, Rick Hansen Trust, accounts payable, and due to the
University of British Columbia. The Foundation classifies its accounts receivable as
loans and receivables, all other financial assets as HFT and all of its financial
liabilities as other liabilities.
Not-for-profit organizations may elect to continue to apply CICA Handbook Section
3861, Financial Instruments - Disclosure and Presentation in place of CICA
Handbook Sections 3862, Financial Instruments - Disclosure, and 3863, Financial
Instruments - Presentation. The Foundation has elected to continue to apply the
financial instrument disclosure and presentation standards in accordance with CJCA
Handbook Section 3861.
7
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2011
h) Use of Estimates
The preparation of the 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. Significant
areas requiring use of management estimates relate to valuation of financial
instruments and provisions for contingencies. Actual results could differ from these
estimates.
i)
Future Accounting and Reporting Changes
Effective April 1, 2012, the Foundation, a government not-for-profit organization, will
adopt Public Sector Accounting Standards (PSAB). The Foundation is currently
reviewing the impact of this change on its financial statements.
3. Charitable Remainder Trust
The Foundation has been named as beneficiary of the following:
2011
Charitable Remainder Trust
4.313,044
$
2010
$ ==4=
,37=5=
.1.;;,21=
The trust holds three shares of Tempo Construction Limited (Tempo). The donor and the
Foundation entered into an agreement for the future purchase and sale of these Tempo
shares. The purchase price for these Tempo shares will be the lesser of $5,000,000 or the
amount received under the $5,000,000 Life Insurance Policy. The fair value of the trust is
determined by discounting the value of the Life Insurance Policy to current dollars using an
appropriate market rate.
4. Investments
The Foundation held the following investments:
2011
Wall Financial Corporation (Note 9)
Life Insurance Policies (Note 11 )
$
$
113.425.000
169.616
113,594,616
2010
$
$
68.900 ,000
166.713
69,066.713
a) The Foundation holds beneficial ownership to 6.5 million common shares of Wall
Financial Corporation (WFC), which amounts to 19.60% (2010- 19.60%) ownership of
WFC. The Foundation does not control nor has significant influence over WFC.
b) The Foundation is named as the beneficiary of various life insurance policies.
8
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2011
5. Capital Assets
In 2010, the Foundation received a gift of residential property (Note 10). The fair value of the
property was $1.5 million at the date of contribution, all of which has been allocated to the
land, based on appraisal of the property at the time of contribution.
2010
2011
$
Land
1,500,000
$ ==1=
,50=0=
,0=00==
6. Due to University of British Columbia
The amount payable to the University of British Columbia arises from donations and
dividends received and granted to the University that have not been paid as at fiscal year
end. The amount payable is unsecured, non-interest-bearing and has no fixed terms of
repayment.
7. Share Capital
Authorized and outstanding
1 common share with a par value of $1 00
2010
2011
Issued
1 Common share
$
100
$
100
8. Rick Hansen Trust (RHT)
RHT was established in December 1996 by Rick Hansen and the Rick Hansen Man in Motion
Foundation, with an initial capital contribution of $100. RHT was established for the purposes
of initiating, establishing, operating, and funding the Rick Hansen Institute at the University of
British Columbia.
The Foundation has been appointed as trustee of the RHT.
The following endowments constitute the RHT:
•
•
•
•
•
•
•
•
Rick Hansen Man in Motion Endowment Fund, held at the Vancouver Foundation.
Disability Resource Centre Endowment Fund, held at the University of British
Columbia and at the Vancouver Foundation.
Rick Hansen National Fellow Program Endowment Fund, held at the University of
British Columbia.
Rick Hansen Institute Spinal Cord Research Endowment Fund, established in August
1999.
B. C. Neurotrauma Fund Professorship Endowment Fund, established in August
1999.
Chair in Spinal Cord Rehabilitation Endowment Fund, established in June 2002.
Cordu/a and Gunter Paetzold Chair, established in June 2002.
BC Leadership Chair in Spinal Cord Research Endowment Fum;J, established in June
2002.
9
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2011
The market value of the Rick Hansen Trust investments at March 31, 2011 is $28,463,564
(201 0 - $27,521 ,432), including $7,800,621 (201 0 - $7,489,191) at the Vancouver
Foundation. Rick Hansen Trust Investments of $20,662,943 (201 0 - $20,032,241) are pooled
and invested together with the University's investments.
The capital of the Rick Hansen Man in Motion Fund, a portion of the capital of the BC
Leadership Chair in Spinal Cord and a portion of the capital of the Disability Resource Centre
Endowment Fund and any additions are administered, invested and managed by the
Vancouver Foundation. The Foundation has complete discretion to transfer the capital of the
fund from Vancouver Foundation to the Foundation as long as the portion removed shall not
exceed a maximum of 25% of the fund in any one quarter.
9. Peter Wall Endowment
In 1992, the Foundation received a major donation totaling $15.4 million from Mr. Peter Wall
and the Peter Wall Charitable Foundation. The donation included cash, a rental property
which has since been sold, and beneficial ownership of 6.5 million common shares of Wall
Financial Corporation, a publicly traded company. The donation established the Peter Wall
Endowment for the purpose of funding the Peter Wall Institute for Advanced Studies at the
University.
The Peter Wall Endowment is governed and managed by a Board of up to five trustees. The
Foundation is represented on this Board by one member, the Chairman of the USC
Foundation. The combined representatives of the University and the Foundation together
comprise the majority of this Board.
10. Kay Earle Endowment
In 2010, the Foundation received a gift of residential property valued at $1.5 million from Ms.
Kathleen F. Earle and established the Kay Earle Endowment. The Foundation agreed to hold
this property for a fifteen-year period from the date of gift. Net rental proceeds will be used to
maintain the property and any excess will be used to support research projects. When the
property is sold after the fifteen-year period, the net proceeds are to be maintained in
perpetuity. Income earned on the proceeds is to be used to support research projects.
11. Life Insurance Policies
The Foundation has been assigned beneficial ownership of various life insurance policies.
The contracts have face value amounts totaling $1.1 million (2010- $1.1 million). Annual
premiums are payable by the donors who have made the assignments.
Tax receipts in an amount totaling $21,576 (2010- $43,250) have been issued to various
donors by the Foundation representing the current fiscal year's premium amounts paid. The
value included in investments represents the fair value being the cash surrender value of the
existing policies.
10
THE UNIVERSITY OF BRITISH COLUMBIA FOUNDATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31,2011
12. Related Party
The University of British Columbia is a related party to the Foundation. Related party
transactions for the 2011 fiscal year include funding of $11 ,378, 729 (201 0 - $11 ,430,227)
provided to the University, and a transfer of $14,984 from the University.
13. Capital Disclosures
The Foundation receives its principal source of capital through donations, investment income
and contributions from the University. The Foundation defines capital to be net assets. The
Foundation's objective when managing capital is to develop public awareness and encourage
financial support for the University. The Foundation has complied with the external
restrictions on the funding provided.
I1