Notes to Financial Statements
(In thousands of dollars)
Year ended December 31, 2020
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. The provincial government announced the appointment of Paul Boniferro as Transition Supervisory Officer ("TSO") with the Ontario College of Teachers, effective February 1, 2021 for a one-year term. With this appointment, the College Council has been dissolved placing the Ontario College of Teachers into a period of governance transition that will result in a new governance model.
As a not-for-profit professional membership organization, the College is exempt from income taxes.
1. Significant accounting policies:
The financial statements of the College have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations. The significant accounting policies followed by the College are outlined below:
The College follows the deferral method of accounting for revenue.
Membership fees received are deferred and recognized as revenue in the year to which the fee relates.
All other unrestricted revenue is recognized as revenue when received or receivable, if the amounts to be received can be reasonably estimated and collection is reasonably assured.
Interest revenue is recorded as earned.
Capital assets purchased are recorded at cost. Repairs and maintenance costs are charged to expenditures. Betterments which extend the estimated useful life of an asset are capitalized. When a capital asset no longer contributes to the College's ability to provide services, its carrying amount is written down to its residual value. Capital assets are amortized over their estimated useful lives on a straight-line basis, as follows:
Building 30 years Building improvements 15 years Furniture 10 years Equipment 3 to 10 years Computer Equipment 4 years Software 3 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 changes in members' equity.
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 the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the year. Actual results could differ from those estimates.
|Bank of Montreal 2.25% GIC, matured April 15, 2020||$ --||$5,005|
|Bank of Montreal 1.0% GIC, matures August 11, 2021.||5,019||--|
Included in the investment balance is $19 (2019 - $5) of accrued interest.
3. Capital assets:
|Cost||Accumulated amortization||Net book value||Net book value|
Included in software is $4,612 (2019 - $3,214) related to the work in progress development of a new CRM Membership Management system. This portion will not be amortized until the project is complete.
4. Accounts payable and accrued liabilities:
Included in accounts payable and accrued liabilities at December 31, 2020 are government remittances owing of $112 (2019 - $52).
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.
On June 25, 2020, the College entered into a Letter of Agreement (the "Agreement") with a Canadian chartered bank to establish a renewed and amended credit facility (the "Facility"). Under the Facility, the College has established two separate loans with different interest rates and maturity dates as outlined below. Both mortgages are amortized over 20 years and are secured by the property. Held as collateral for the Facility are the property, a chattel mortgage and a general assignment of rents and leases.
Under the terms of the Agreement, the College is required to comply with certain financial and non-financial covenants. As at December 31, 2020, the College is in compliance with the covenants.
As at December 31, the balances outstanding are as follows:
|Bank of Montreal, 5.77% payable in monthly instalments of principal and interest of $93, maturing June 30, 2020||$ --||$9,757|
|Bank of Montreal, 5.77% payable in monthly instalments of principal and interest of $40, maturing June 30, 2020||--||4,242|
|Bank of Montreal, 3.04% payable in monthly instalments of principal and interest of $38, maturing June 30, 2025||6,664||--|
|Bank of Montreal, 3.54% payable in monthly instalments of principal and interest of $40, maturing June 30, 2030||6,669||--|
|Less current portion||498||13,999|
Principal payments are due as follows:
6. Credit facility:
Under the Agreement as disclosed in note 5, the College has access to an operating demand loan with an overall limit of $5,000, which bears interest at the bank prime rate plus 0.5%. As at December 31, 2020, no amounts (2019 - nil) had been drawn against this facility.
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. Members' equity:
The College's Council has designated certain amounts of previously unrestricted members' equity to be internally restricted. The internally restricted funds are available only with the approval of the Council. The purpose of the internally restricted operating reserve is to maintain two months of cash flows for ongoing operations and programs, and to fund unplanned opportunities and liabilities. Paul Boniferro, TSO with the Ontario College of Teachers reviewed and approved the year-end financial statements acting in his new capacity as the authority replacing Council. Mr. Boniferro approved the transfer of the year-end cash surplus of $812 to restricted funds (2019 - transfer from internally restricted to unrestricted of $3,733).
10. 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 three 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 $1,823 (2019 - $1,798), which is included in the employee benefits expense in the statement of operations and changes in members' equity.
11. Financial risks:
On March 11, 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization and has had a significant financial, market and social dislocating impact. This has resulted in governments worldwide, including the Canadian and provincial governments, enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption in Canada to fundraising efforts. Management has taken measures to manage this risk and is actively monitoring the situation to minimize its impact to the College.
The College believes that it is not exposed to significant interest-rate, credit or cash flow risk arising from its financial instruments. Additionally, the College believes it is not exposed to significant liquidity risk as all investments are held in instruments that are highly liquid and can be disposed of to settle commitments.