Radio Western
Report to the Board of Directors
For the year ended May 31, 2010
Reported as at November 16, 2010
PricewaterhouseCoopers LLP
Chartered Accountants
465 Richmond Street, Suite 300
London, Ontario
Canada N6A 5P4
Telephone + 1 519 640 8000
Facsimile + 1 519 640 8015
www.pwc.com
November 16, 2010
Board of Directors
Radio Western
We have substantially completed our audit of the financial statements of Radio Western (the “Organization”)
for the year ended May 31, 2010 and propose to issue an unqualified report dated November 18, 2010 on
those financial statements. Our draft report along with management’s draft financial statements are included
in Appendix A.
We have issued the accompanying report to the members of the Board of Directors and management of the
Organization to assist in their review of the financial statements. At the Board of Directors meeting to be held
on November 18, 2010, we will be responding to questions from the Board relating to our audit.
We would like to express our thanks to the management and staff of Radio Western who have assisted us in
carrying out our work. We look forward to meeting with you and discussing the contents of this report and
any other matters which you consider appropriate.
Yours very truly,
Kerry Gerber
Partner
Audit and Assurance Group
cc:
Cathy Clarke
Carrie Passi
“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.
Radio Western
Report to the Board of Directors
Contents
1.
2.
3.
4.
5.
6.
Executive summary......................................................................... 1
Significant audit, accounting and reporting matters ........................ 2
Required communications to the Board of Directors....................... 3
Communicating control weaknesses............................................... 4
2010 fees ........................................................................................ 5
Accounting and financial reporting developments........................... 6
Appendices
A - Draft auditors’ report and draft financial statements
B - Management representation letter
C - Summary of unadjusted and adjusted differences
The matters raised in this and other reports that will flow from the audit are only those which have come to our attention arising
from or relevant to our audit that we believe need to be brought to your attention. They are not a comprehensive record of all the
matters arising, and in particular we cannot be held responsible for reporting all risks in your business or all internal control
weaknesses. This report has been prepared solely for your use and should not be quoted in whole or in part without our prior
written consent. No responsibility to any third party is accepted as the report has not been prepared for, and is not intended for,
any other purpose.
Radio Western
Report to the Board of Directors
1. Executive summary
This document outlines the results of our audit of the financial statements of the Organization as at and for
the year ended May 31, 2010.
The following topics are discussed in the accompanying report:
■
The fact that we have substantially completed our audit and plan to issue an unqualified opinion
subject to the completion of certain procedures discussed below;
■
Significant audit, accounting and reporting matters;
■
Required communications to the Board of Directors;
■
Communicating control weaknesses; and
■
Accounting, auditing and reporting developments.
At the time of writing this report, the following items remain outstanding:
■
Receipt of management representation letters,
■
Legal confirmations, and
■
Approval of the final financial statements by the Board of Directors
We will update the Board with regards to any issues that arise as a result of our completing the above
procedures at the forthcoming meeting. The final procedure we need to evidence prior to the release of our
opinion is the approval of the financial statements.
We would like to highlight to the Board that we received full cooperation from management during the course
of the audit and had unrestricted access to personnel. We had no disagreements with management over
accounting or reporting matters.
PricewaterhouseCoopers
(1)
Radio Western
Report to the Board of Directors
2. Significant audit, accounting and reporting matters
Our comments should only be taken in the context of the financial statements as a whole and are not meant
to express an opinion or view on any individual items or accounting estimates.
a)
Items of significance in the current year
We are responsible for ensuring that the Board of Directors is informed about the initial selection of and
changes in significant accounting policies or their application. We are also responsible for informing the
Board of Directors of significant unusual transactions and the effect of significant policies in controversial or
emerging areas.
Issue
Background
Recommendation
GST/HST
Registration

Radio Western is not registered for
GST/HST. However, GST is charged
on revenue and collected on purchases.
 Radio Western should no longer
consolidate GST/HST activity with the
USC.

Radio Western has historically
consolidated their GST activity with the
University Students’ Council (USC)
remittance.

This has provided the USC with
efficiencies during the GST remittance
process.
 If GST/HST registration does not
occur, Radio Western should cease
collection of GST/HST on sales and
will result in Radio Western losing the
ability to claim input tax credits.
PricewaterhouseCoopers
(2)
Radio Western
Report to the Board of Directors
3. Required communications to the Board of Directors
Canadian Assurance Standard 5751 and other professional standards require the external auditors to
communicate certain matters to the Board of Directors that may assist the Board in overseeing
management’s financial reporting and disclosure process. Below we summarize these required
communications as they apply to the Organization:
Matter to be
communicated
Auditors’ response
The auditors’ professional
judgment on other
qualitative aspects of
accounting principles
including existence of
acceptable alternative
policies and methods
Accounting policies have been consistently applied from prior year and there
are no significant changes. All alternative accounting treatments within
Canadian generally accepted accounting principles (GAAP) for policies and
practices related to material items (including revenue recognition,
measurement, presentation and disclosure alternatives) have been
discussed with management during the current audit period, including the
acceptability of the policies or methods ultimately retained by management.
Auditors’ responsibility under
Canadian generally
accepted auditing standards
(GAAS)
The financial statements are the responsibility of management. Our audit
was designed in accordance with auditing standards generally accepted in
Canada to provide reasonable, rather than absolute, assurance that the
financial statements are free of material misstatement. As a part of the audit,
we obtained an understanding of internal controls sufficient to plan our audit
and to determine the nature, timing and extent of testing performed.
Significant audit adjustments
and unadjusted differences
Refer to Appendix C for a summary of significant adjusted and unadjusted
differences.
Disagreements with
management
During our audit, we received full co-operation from management and had
no disagreements about matters that individually or in the aggregate were
significant to the Organization’s financial statements, the effectiveness of
internal control or our audit opinion.
Management’s consultation
with other accountants
Management has advised us that it has not relied on consultations with
other accounting firms regarding any significant accounting matters in fiscal
2010.
Significant difficulties
encountered during the audit
No significant difficulties were encountered while performing our audit which
requires the attention of the Board of Directors.
Fraud and illegal acts
No irregularities, fraud or illegal acts involving senior management, or any
that would cause a material misstatement of the financial statements, came
to our attention as a result of our audit procedures completed to issue a
report on the financials taken as a whole, or from further discussions with
management.
Independence
We are not aware of any issues that would impact our independence on this
engagement since our independence letter dated July 6, 2010.
PricewaterhouseCoopers
(3)
Radio Western
Report to the Board of Directors
4. Communicating control weaknesses
Professional standards require the auditor to communicate to management and the Board of Directors
significant weaknesses in the design or operation of internal controls identified during the audit.
We considered the Organization’s internal control over financial reporting as a basis for designing our audit
procedures for the purpose of expressing our opinion on the financial statements but not for the purpose of
expressing an opinion on the effectiveness of internal control over financial reporting.
We do, however, discuss our observations and recommendations with management during the course of our
audit and highlight the following items designed to help the Organization improve internal controls and
achieve operational efficiencies.
Below is a summary of the control weaknesses identified that should be brought to your attention as a result
of our review.
Control deficiency
Internally Restricted Funds
Legal contingency funds have
been set aside. These funds are
not tracked separately for
accounting purposes.
Recommendation
 A separate bank account
should be set up for these
contingency funds in order to
allow for more accurate
tracking
Management’s comments
Management is in agreement and
will consider implementation in the
next fiscal year.
 A separate reserve fund should
be set up for accounting
purposes
Invoicing of Advertising
Revenue
Sales invoices are not issued for
advertising contracts, therefore
revenue is recorded only when
cash is received. Outstanding
receivables are not assessed on
a regular basis.
 Invoices should be issued for
each advertising contract to
allow for revenue and/or
deferred revenue to be
recorded in the appropriate
period
 The collectability of
outstanding receivables should
be assessed on a regular basis
Board of Directors Meeting
Minutes
 Board meeting minutes should
be retained for future reference
Meeting minutes are not properly
retained. The responsibility of
maintaining these records has
not been assigned to one
individual.
 One individual should be
assigned the responsibility of
maintaining these documents
PricewaterhouseCoopers
Management is in agreement.
Management is in agreement.
 A copy of meeting minutes
should be forwarded to the
Finance Department
(4)
Radio Western
Control deficiency
Manual Journal Entry Approval
and Maintenance
All accounting staff members
have the ability to create manual
journal entries. Manual journal
entries are not maintained in a
sequential manner.
Recommendation
 A formal review process should
be implemented in which each
manual journal entry is
reviewed by management
Report to the Board of Directors
Management’s comments
Management is in agreement.
 Manual journal entries should
be organized by batch number
for easy reference
 Manual journal entries will be
created with informative
descriptions
This communication is intended solely for the information and use of the Board of Directors, management
and others within the organization.
5. 2010 fees
We communicated our estimated fees when we presented our audit plan on July 14, 2010. We provided the
Organizations’ management with updates related to any significant changes in the level of effort and
associated professional fees necessary to complete the engagement. Please see the actual fees and out-ofpocket expenses for the 2010 audits as follows:
Service description
Actual fees
2010
Audit
6,195
Total Audit services
6,195
Preparation of income tax returns
630
Total Tax services
630
Total services
PricewaterhouseCoopers
6,825
(5)
Radio Western
Report to the Board of Directors
6. Accounting and financial reporting developments
Future of financial reporting for not-for-profit organizations
NPOs have the option to adopt International Financial Reporting Standards (IFRS). The Accounting
Standards Board (AcSB) and the Public Sector Accounting Board (PSAB) have been reassessing the
strategic direction of financial reporting for NPOs in Canada and in recent communications have highlighted
the following principles:
•
•
Options are required to reflect the diversity and complexity of NPO organizations
There is much support for the specific standards currently in place
In March 2010, the AcSB issued an exposure draft, proposing that NPOs not subject to public sector
reporting requirements will have a choice of adopting:
•
•
Accounting Standards for Private Enterprises (ASPE) supplemented by the Section 4400 series (which
addresses situations specific to NPOs); and
IFRS
In a separate exposure draft, PSAB proposes to incorporate the 4400 series into the Public Sector
Handbook and to direct government NPOs to adhere to the standards in the Public Sector Handbook.
Comments to both exposure drafts are requested by July 15, 2010 and the final standards are expected to
be issued by the end of 2010, with implementation required for fiscal periods beginning on or after January
1, 2012. Early adoption of the standard will be permitted. The existing standards for NPOs will remain in
effect until the completion of due process for changing those standards.
We will keep management and the Board of Directors informed of any changes that are made to the options
available to the Organization.
PricewaterhouseCoopers
(6)
Radio Western
Report to the Board of Directors
Appendix A
Draft auditors’ report and draft
financial statements
Radio Western
Report to the Board of Directors
Appendix B
Management representation letter
Radio Western
Report to the Board of Directors
Appendix C
Summary of unadjusted and
adjusted differences
a)
Summary of unadjusted differences
At the conclusion of our audit, we summarized all significant unadjusted items and discussed these with
management. The net amount of unadjusted items of which we are aware at May 31, 2010 resulted in pretax income of the company being overstated by $6,621.
We are not proposing further adjustments, and concur with management’s assertion that the unadjusted
items above are immaterial, both individually and in aggregate to the financial statements taken as a whole.
Earnings
Description
Estimated Advertising Revenue
Write-off of Input Tax Credit
(ITC) Receivable
Total pre-tax differences
Over
(under)
stated
$3,854
$2,767
Assets
(over) under
stated
($3,854)
($2,767)
$6,621
($6,621)
Balance sheet
Liabilities
over (under)
Stated
Opening
equity over
(under) stated
$Nil
$Nil
Radio Western
b)
Report to the Board of Directors
Summary of adjusted differences
Earnings
Description
Reclassification of Equipment
Rental Expense out of
Depreciation Expense
($18,335)
Reclassification of Receivables
into Due from USC ($365,337)
Adjustment for Prior Period
Retained Earnings
Total pre-tax differences
Over
(under)
stated
-
Assets
(over) under
stated
Balance sheet
Liabilities
over (under)
Stated
Opening
equity over
(under) stated
$22,768
$22,768
($22,768)
$Nil
($22,768)
$Nil
Radio Western
Report to the Board of Directors
www.pwc.com/ca
© 2010 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an
Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member
firms of the network, each of which is a separate and independent legal entity.