Notes to Financial Statements

December 31, 2013

(in thousands of dollars)

1 Ontario College of Teachers’ mandate

The Ontario College of Teachers (the College) was established by an Act of the Ontario Legislature proclaimed on July 5, 1996.

The College is an independent, self-regulating professional body with authority to license and regulate the practice of teaching in Ontario.

The affairs of the College are administered by a Council comprised of 37 members of whom 23 are elected by the membership and 14 are appointed by the Lieutenant-Governor-in-Council.

As a not-for-profit professional membership organization, the College is not liable for income taxes.

2 Summary of significant accounting policies

The financial statements of the College have been prepared in accordance with Accounting Standards for Not- for-Profit Organizations (ASNPO). The significant accounting policies followed by the College are outlined below:

Revenue recognition

The College follows the deferral method of accounting for revenues.

Membership fees received are deferred and recognized as revenue in the year to which the fee relates.

All other 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.

Investments

Investments include cash and short-term, highly liquid investments that are held for investment purposes rather than to meet short-term cash commitments.

3 Capital assets

Capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, as follows:

Financial instruments

Financial liabilities are initially recognized at fair value less any financing fees or transaction costs. The financial liabilities are subsequently measured at amortized cost.

Financial assets are initially recognized at fair value plus any financing fees or transaction costs. The financial investments are recorded at amortized cost and include accrued interest. An impairment is recognized if there is an indication of impairment and a significant adverse change has occurred during the period in the expected timing or amount of future cash flows from the financial asset or group of assets. The impairment loss is measured as the difference between the carrying amount of the asset or group of assets and the highest of the present value of the discounted cash flows of the asset or group of assets. Impairments are recognized through the use of an allowance account, with a corresponding charge to the statement of operations.

Unless otherwise noted, it is management’s opinion that the College is not exposed to significant interest, currency or credit risk arising from components of these financial statements.

Use of estimates

The preparation of financial statements in conformity with ASNPO 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 expenses during the reporting period. Actual results could differ from those estimates.

Capital assets

During the year, the College wrote off fully amortized computer equipment of $6,331 (2012 - $nil).

4 Accounts payable and accrued liabilities

Included in accounts payable and accrued liabilities are government remittances owing of $129 (2012 - $121).

5 Mortgage payable

On June 23, 2010, the College purchased eight floors of a 15-floor commercial condominium building at 101 Bloor Street West. The vendor retained the bottom six floors, including the valuable ground floor retail space. Total cost of the property purchased was $20.5 million, which was recorded in capital assets.

The College received a $14.12 million mortgage from its bank to finance the purchase. The mortgage is amortized over 30 years and is secured by the property. Held as collateral for the mortgage are the property, a chattel mortgage and a general assignment of rents and leases.

The College also received a $6.14 million construction mortgage from its bank to finance the building improvements. This mortgage bears the same terms as those of the building acquisition mortgage.

* Note: For the first two years, only interest payments were required. Blended payments of interest and principal began on July 31, 2012.

Principal payments are due as follows:

Interest expense of $1,144 (2012 - $1,166) relating to the mortgage is included in operating support in the statement of operations.

6 Investments

Included in the investment balance is $nil (2012 - $20) of accrued interest.

7 Commitments

The College has entered into various operating lease commitments for office equipment. The estimated annual payments for these operating lease commitments are as follows:

8 Contingencies

1. In 2013, a claim of $270 was made against the College relating to disagreements in the scope and nature of certain restoration work performed by the College at its previous office space. The College believes that it performed all restoration work according to accepted standards and is disputing the claim.
2. The College is involved in claims that arise from time to time in the normal course of operations. Other than as noted above, management is unaware of any matters that will have a material adverse effect on the financial position of the College or its results of operations. No amount has been provided in the financial statements in respect of these claims. Consistent with the above-noted claim, gains or losses, if any, sustained upon the ultimate resolution of these claims will be accounted for prospectively in the period of settlement in the statement of operations.

9 Pension plans

Employees who are certified teachers are required to participate in the Ontario Teachers’ Pension Plan (OTPP), a defined benefit pension plan. All but seven non-teacher employees are members of the Ontario Municipal Employees Retirement System (OMERS), a defined benefit pension plan with similar characteristics to the OTPP. Both OTPP and OMERS are multi-employer pension plans. The College matches the contributions made by the employees. Contributions are based on a statement from the respective plan for each fiscal year.

The College had a legacy defined contribution pension plan for the seven non-teacher employees who chose not to participate in OMERS. No contributions were made to the plan in 2013. This plan was wound up in 2013.

The College’s total annual pension expense for the two plans was $1,460 (2012 - $1,281), which is included in the employee compensation expense in the statement of operations.

10 Credit facility

The College has an unsecured operating line of credit of $5,000, which bears interest at the bank prime plus 0.5%. As at December 31, 2013 (2012 - $nil), no amounts had been drawn against this facility.

11 Liquidity risk

Liquidity risk is the risk the College will not be able to meet its financial obligations when they come due. The College manages its liquidity risk by forecasting cash flows from operations and maintaining a credit facility to ensure it has sufficient available funds to meet current and foreseeable financial requirements. The College has sufficient funds to meet its current obligations.

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