Note 2: Summary of significant accounting policies
The consolidated financial statements of the College have been prepared in accordance with Canadian generally accepted accounting principles and reflect the financial affairs of the College and its wholly controlled foundation, Ontario College of Teachers Foundation.
Change in accounting policies
Effective January 1, 2009, the College adopted retrospectively the changes to the recommendations in The Canadian Institute of Chartered Accountants (CICA) Handbook Section 4400, Financial Statement Presentation for Not-for-Profit Organizations that includes the option to eliminate the requirement to separately disclose the amount of net assets invested in property and equipment. The College has chosen to continue its disclosure of net assets invested in property and equipment as a separate component of its net assets.
Effective January 1, 2009, the College adopted retrospectively the changes to the recommendations in CICA Handbook Section 1000, Financial Statement Concepts. This standard clarifies that items that do not meet the definition of an asset or a liability may not be recognized on the consolidated balance sheet. As a result, costs of $367,194 incurred for the 2009 election were expensed during the year. The change in accounting policy has been accounted for retrospectively and thus the comparative consolidated balance sheet, consolidated statement of operations and consolidated statement of members’ equity for fiscal 2008 have been restated as follows:
| (in thousands of dollars) | As reported 2008 | Adjusted | As adjusted 2008 |
|---|---|---|---|
| $ | $ | $ | |
| Other assets | 56 | (56) | – |
| Members’ equity – Beginning of year | (16,826) | 169 | (16,657) |
| Expenses | 31,227 | (113) | 31,114 |
Revenue recognition
The College follows the deferral method of accounting for revenues. Restricted revenues are recognized as revenue in the year in which the related expense is incurred.
Financial contributions received by the College from third parties for property and equipment purchases are deferred and recognized in revenue on the same basis as the amortization of the property and equipment acquired. Membership fees received in advance are deferred and recognized as revenue in the year to which the fee relates.
Unrestricted revenues are recognized as revenue when received or receivable, if the amounts to be received can be reasonably estimated and collection is reasonably assured.
Property and equipment
Property and equipment are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, as follows:
| Computer equipment | 33-1/3% per annum |
| Furniture and office equipment | 10% per annum |
| Leasehold improvements | over the remaining term of the lease |
Deferred lease inducements
The College amortizes lease inducements over the term of the lease and nets the amortization against rent expense.
Financial instruments
The College utilizes various financial instruments. Unless otherwise noted, it is management’s opinion that the College is not exposed to significant interest, currency or credits risks arising from these financial instruments.
Cash and investments are classified as held-for-trading and are recorded at fair value. Accounts receivable are classified as loans and receivables and accounts payable and accrued liabilities are classified as other financial liabilities, which are both recorded at cost.
Income taxes
As a not-for-profit professional membership organization, the College is not liable for income taxes.
Use of estimates
The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles 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 consolidated financial statements and the reported amount of revenue and expenses during the reporting period. For all estimates, actual results could differ from those estimates.