June 1999

Blue Pages

Ontario College of Teachers
Financial Statements

For the Year Ended December 31, 1998

 

Auditors’ Report

March 5, 1999

To the Members of the Ontario College of Teachers

We have audited the balance sheet of the Ontario College of Teachers as at December 31, 1998 and the statements of operations and members’ equity, and changes in financial position for the year then ended. These financial statements are the responsibility of the College’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the College as at December 31, 1998 and the results of its operations and the changes in its financial position for the year then ended in accordance with generally accepted accounting principles.

PricewaterhouseCoopers LLP

 Chartered Accountants

Balance Sheet
As at December 31, 1998

Assets	1998 $(000)	1997 $(000)
Current Assets
Cash and short-term investments	4,531	1,582
Accounts receivable	308	110
	4,839	1,692
Deferred election costs (note 2)	193	330
Deferred membership registration costs (note 2)	591	742
Capital assets (notes 2 and 3)	5,178	5,248
	10,801	8,012
Liabilities	1998 $(000)	1997 $(000)
Current Liabilities
Accounts payable and accrued liabilities	1,221	1,486
Capital lease obligations (note 4)	140	130
Deferred lease inducement (notes 2 and 5)	2,757	2,955
	4,118	4,571
Members' Equity	1998 $(000)	1997 $(000)
Reserve for working capital (note 6)	5,800	2,500
Unappropriated balance	883	941
	6,683	3,441
	10,801	8,012
Statement of Operations and Members’ Equity For the year ended December 31, 1998
Revenue	1998 $(000)	1997 $(000)
Annual membership fees	15,603	14,771
Other fees	1,059	396
Interest and other revenue	636	178
	17,298	15,345
Expenses
Employee compensation	7,319	5,328
Council and committees	174	148
General services to members	1,208	1,221
Professional affairs	244	96
Investigations and hearings	485	131
Operating support	3,744	2,816
Financing	17	68
Asset amortization	865	743
	14,056	10,551
Excess of revenue over expenses for the year	3,242	4,794
Members’ equity (deficit) – Beginning of year	3,441	(1,353)
Members’ equity – End of year (note 6)	6,683	3,441
Statement of Changes in Financial Position For the year ended December 31, 1998
Cash Provided By (Used In)	1998 $(000)	1997 $(000)
Operating Activities
Excess of revenue over expenses for the year	3,242	4,794
Add non-cash items reflected in operations	667	728
Net change in non-cash working capital items	(463)	(233)
	3,446	5,289
Investing Activities
Deferred membership registration	–	(67)
Deferred election costs	–	(72)
Leasehold improvements	(218)	(2,753)
Office furnishings and equipment	(112)	(1,192)
Leased capital equipment	(177)	(260)
	(507)	(4,344)
Financing Activities
Province of Ontario loan	–	(1,701)
Leasehold improvement allowance	–	1,793
Capital equipment leases	10	130
	10	222
Net increase in cash during the year	2,949	1,167
Cash position – Beginning of year	1,582	415
Cash position – End of year	4,531	1,582

Cash position includes cash and short-term investments.

Notes to Financial Statement

December 31, 1998

1. Ontario College of Teachers’ mandate

The Ontario College of Teachers (the College) was established by an act of the Ontario Legislature, which was 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 managed and administered by a Council comprised of 31 members, of whom 17 are members elected by the membership.

2. Summary of significant accounting policies

The financial statements of the College have been prepared in accordance with generally accepted accounting principles. The more significant aspects are:

a) Deferred election costs
Council elections are held every three years. The cost of conducting these elections is deferred and amortized over the three-year term of the elected members.

b) Deferred membership registration costs
To establish an initial registry of members, the College launched a campaign to acquire names and addresses of Ontario teachers and validated eligibility against the Ministry of Education and Training records. This initial cost is being amortized over six years commencing in 1997.

c) Capital assets
Capital assets are recorded at historical 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 equipment	10% per annum
Leasehold improvments	Over the remaining term of the lease

d) Deferred lease inducement
As described in note 5, the College is amortizing the lease inducement over the term of the lease.

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

3. Capital assets

			1998	1997
	Cost $(000)	Accumulated Amortization $(000)	Net $(000)	Net $(000)
Furniture	1,558	303	1,255	1,326
Equipment	275	52	223	222
Leased computer equipment	441	228	213	180
Leasehold improvements	3,974	487	3,487	3,520
	6,248	1,070	5,178	5,248

The capital assets acquired by the College relate to office and meeting space at 121 Bloor Street East, Toronto.

4. Capital lease obligations

The College has acquired computer hardware and other office equipment through leasing arrangements. At December 31, 1998, the College had capital lease obligations amounting to $270,000 at implicit rates of interest ranging from 6.7% to 8.0%. The future minimum annual payments are as follows:

	$(000)
Year ending December 31, 1999	130
Subsequent years
2000	97
2001	43
	140
	170

5. Commitments

a) Premises lease commitment
In September 1996, the College entered into a long- term lease agreement, which expires November 30, 2012. The lease is for office space at 121 Bloor Street East, Toronto. In addition to a rent free period until November 30, 1997 (valued at $615,300), the College obtained an allowance for leasehold improvements of $2,356,891, which is repayable out of rental payments.

The estimated annual rental payments, including a provision for operating costs under the lease agreement, are as follows:

	$(000)
Year ending December 31
1999	1,062
2000	1,062
2001	1,062
2002	1,062
2003-2012	11,843
	16,091

In accordance with guidance provided by the Canadian Institute of Chartered Accountants, the College will be reporting an average rental cost for premises over the term of the lease agreement and will be amortizing the benefit of the lease inducements over the same period commencing in 1997.

b) Other operating lease commitments
The College has entered into various operating lease commitments for computer hardware and other office equipment.

The estimated annual payments for these operating lease commitments are as follows:

	$(000)
Year ending December 31
1999	330
2000	201
2001	83
2002	27
2003	–
	641

6. Reserve for working capital

The Council of the College established a reserve for working capital in 1997 in recognition of the need to provide working capital for continuing operations. In 1998, the Council approved an addition of $3,300,000 from unappropriated Members’ Equity to the opening balance of $2,500,000. The closing balance in the reserve for working capital is $5,800,000.

7. Uncertainty due to the Year 2000 issue

The Year 2000 issue arises because many computerized systems use two digits rather than four to identify a year. Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when information using Year 2000 dates is processed. In addition, similar problems may arise in some systems which use certain dates in 1999 to represent something other than a date. The effects of the Year 2000 issue may be experienced before, on, or after January 1, 2000, and if not addressed, the impact on operations and financial reporting may range from minor errors to significant systems failure which could affect an entity’s ability to conduct normal business operations.

Since the College was established in 1996, it has been able to develop all of its core systems with Year 2000 issues in mind. Nonetheless, the College has established a project team to review and document its readiness with respect to all operations including reviews and testing of computer hardware, purchased software, building facilities and office equipment, vendor services and data exchanges with stakeholders.

Management is of the opinion that the work under way will help to reduce the risks that the College may face. However, it is not possible to be certain that all aspects of the Year 2000 issue affecting the College, including those related to the efforts of suppliers, stakeholders, or other third parties, will be fully resolved.

8. Comparative amounts

Certain comparative amounts have been reclassified from those previously presented to conform with the presentation of the 1998 financial statements.