BOARD OF DIRECTORS
JOHN CHALLINOR II
A. LASSONDE INC.
PROMOTIONS & EDUCATION
INDEPENDENT AUDITOR’S REPORT
MARCH 19, 2015
To the Members of Canadian Beverage Container Recycling Association
We have audited the accompanying financial statements of Canadian Beverage Container Recycling Association which comprise the statement of financial position as at December 31, 2014 and the statements of operations, changes in net assets and cash flows for the year then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not for profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements present fairly, in all material respects, the financial position of Canadian Beverage Container Recycling Association as at December 31, 2014 and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not for profit organizations.
NOTES TO FINANCIAL STATEMENTS
1. Incorporation and purpose of the organization
The Canadian Beverage Container Recycling Association (CBCRA) is a not-for-profit organization that was established by beverage companies to improve beverage container recycling rates in Manitoba. CBCRA’s purpose is to promote and facilitate the recycling of end-of-life beverage containers through the design and funding of recycling programs and public promotion and education.
CBCRA was incorporated without share capital on March 26, 2010 under Part II of the Canada Corporations Act and commenced operations on April 1, 2010. CBCRA’s objective is to carry on its operations without pecuniary gain to its members and any profits or other accretions to CBCRA are to be used in promoting its objects.
For income tax purposes, CBCRA qualifies as a not-for-profit organization which is exempt from income tax under Section 149(1)(l) of the Income Tax Act.
2. Significant accounting policies
CBCRA follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred.
Container recycling fees are recognized as unrestricted income in the month in which they are earned, if the amount to be received can be reasonably estimated and collection is reasonably assured.
Cash consists of cash on hand and cash held at banking institutions.
Inventory is recorded at landed cost and consists of recycling bins and carts being held for use in future
Capital assets and amortization
Capital assets are recorded at original cost less accumulated amortization.
Amortization of furniture and equipment is recorded on a declining-balance basis of 20 per cent over the assets’ useful lives.
Use of estimates
The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.
Volunteer directors contribute a significant number of hours annually to oversee the activities of CBCRA. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements.
a) Measurement of financial instruments
CBCRA initially measures its financial assets and financial liabilities at fair value adjusted by, in the case of a financial instrument that will not be measured subsequently at fair value, the amount of transaction costs directly attributable to the instrument.
CBCRA subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments in equity instruments, which are subsequently measured at fair value. Changes in fair value are recognized in the statement of operations.
Financial assets measured at amortized cost
include cash and accounts receivable.
Financial liabilities measured at amortized cost
include accounts payable and accrued liabilities.
Financial assets measured at amortized cost are tested for impairment when there are indicators of possible impairment. When 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, a write-down is recognized in the statement of operations. When events occurring after
the impairment confirm that a reversal is necessary, the reversal is recognized in the statement of operations up
to the amount of the previously recognized impairment.
3. Internally restricted net assets
In 2012, the Board of Directors internally restricted $2,000,000 to fund future beverage container recycling infrastructure costs in the City of Winnipeg. The purpose for which the funds were restricted have been largely satisfied by the CBCRA. During the current year, the Board of Directors approved the transfer of the remaining funds of $415,863 in the internally restricted net assets to the unrestricted net assets.
4. Government remittances
Government remittances consist of amounts required to be paid to government authorities and are recognized when the amounts become due. In respect of government remittances, $nil (2013 – $nil) is included within accounts payable and accrued liabilities.
5. Financial instruments
CBCRA manages risk and risk exposures by applying policies approved by the Board of Directors. The significant financial risks to which CBCRA is exposed are credit risk and liquidity risk.
a) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party
by failing to discharge an obligation.
CBCRA’s financial instruments that are exposed to concentration of credit risk consist primarily of cash and accounts receivables. Cash, at times, may exceed amounts insured by the Canadian Deposit Insurance Corporation or the Credit Union Deposit Guarantee Corporation. CBCRA has a large number of members which minimizes the concentration of credit risk on accounts receivables.
b) Liquidity risk
Liquidity risk is the risk that CBCRA will encounter difficulty in meeting obligations associated with financial liabilities.
CBCRA has established budgetary and cash forecasts to ensure it has the funds necessary for fulfilling its obligations.
a) CBCRA has an operating lease for premises requiring approximate annual rental payments as follows:
b) A program management services agreement was in place with Reclay StewardEdge Inc. to provide various administrative and communication tasks to CBCRA until December 2014 at a monthly amount of $88,676. Subsequent to year end, the agreement was renewed
to December 2017 at the same amount.
During 2014, payments under this commitment totalled $1,075,476 (2013 – $1,065,745) and are included in program management services and steward services.
7. Comparative amounts
Certain comparative amounts have been reclassified to conform to the current year’s financial statement presentation.