Notes to Financial Statements
December 31, 2015
(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:
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 include cash and short-term, highly liquid investments that are held for investment purposes rather than to meet short-term cash commitments.
Capital assets are recorded at cost and are amortized on a straight-line basis over their estimated useful lives, as follows:
3, 4, and 10 years
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. Investments are recorded at amortized cost and include accrued interest.
Financial assets are assessed for impairment on an annual basis at the end of the fiscal year if there are indicators of impairment. If there is an indicator of impairment, the College determines if there is a significant adverse change in the expected amount or timing of future cash flows from the financial asset. If there is a significant adverse change in the expected cash flows, the carrying value of the financial asset is reduced to the highest of the present value of the expected cash flows, the amount that could be realized from selling the financial asset or the amount the College expects to realize by exercising its right to any collateral. If events and circumstances reverse in a future period, an impairment loss will be reversed to the extent of the improvement, not exceeding the initial carrying value. Impairments are recognized through the use of an allowance account, with a corresponding charge in the statement of operations and members’ equity.
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.
3. Capital Assets
|Building (note 5)||12,834||2,353||10,481||10,909|
|Land (note 5)||7,660||–||7,660||7,660|
4. Accounts payable and accrued liabilities
Included in accounts payable and accrued liabilities at December 31, 2015 are government remittances owing of $183 (2014 - $163).
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 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.
|Bank of Montreal, 5.77% payable in monthly instalments of principal and interest of $93, maturing June 30, 2020||12,978||13,329|
|Bank of Montreal, 5.77% payable in monthly instalments of principal and interest of $40, maturing June 30, 2020||5,644||5,796|
|Less: Current portion||533||503|
Principal payments are due as follows:
|Bank of Montreal cashable 1.25% GIC, matured on March 6, 2015||–||1,010|
|Bank of Montreal High Interest Savings Account, variable rate||–||3,717|
|Vancity 1.4% GIC, matured on February 22, 2016||4,048||–|
|Bank of Montreal 1.4% GIC, maturing on August 22, 2016||4,021||–|
Included in the investment balance is $69 (2014 - $10) of accrued interest.
The College has entered into various operating lease commitments for office equipment. The estimated annual payments for these operating lease commitments are as follows:
The College is involved in claims that arise from time to time in the normal course of operations. 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.
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 four 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’s total annual pension expense for the two plans was $1,584 (2014 - $1,473), which is included in the employee compensation expense in the statement of operations and members equity.
10. Credit facility
The College has an unsecured operating line of credit of $5,000, which bears interest at the bank prime rate plus 0.5%. As at December 31, 2015, no amounts (2014 - $nil) 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.
12. Other items
In the prior year, the College successfully concluded a long standing dispute with CRA resulting in a net refund of $1,765 and they were favourably reassessed for net property tax of $1,212. Of the total $2,977, $1,212 was recorded as an account receivable at December 31, 2014 and $96 still remains outstanding.
13. Subsequent event
During the first quarter of 2016, the College negotiated a one-time mortgage prepayment without penalty on the fixed term mortgages equal to 10% of the principal. The payment occurred on April 1, 2016.
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