financial statements september 30, 2015 · pm t 905 522 6555 f 905 522 6574 6th floor, one james...

September 30, 2015Financial Statements

Canadian Friends of Tel Aviv University Inc. / Les Amis Canadiens de L'Universite de Tel Aviv, Inc.

L E S A M I S C A N A D I E N S

F R I E N D S C A N A D I A N

Canadian Friends of Tel Aviv UniversityInc. / Les Amis Canadiens de L'Universitede Tel Aviv, Inc.

Financial Statements

September 30, 2015

PMT 905 522 6555 F 905 522 6574 6th Floor, One James Street South Hamilton ON L8P 4R5

March 21, 2016

Independent Auditor's Report

To the Members of Canadian Friends of Tel Aviv University Inc.

We have audited the accompanying financial statements of Canadian Friends of Tel Aviv University Inc.,which comprise the statement of financial position and statement of changes in net assets as atSeptember 30, 2015, the statements of financial activities for the operating fund and endowment fund and thestatement of cash flows for the year then ended, as well as summary of significant accounting policies andother explanatory information.

Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordance with Canadian accounting standards for not-for-profit organizations, and for such internal controlas management determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with Canadian generally accepted auditing standards. Those standards require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the organization's preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the organization'sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

PeTTINELLI MASTROLUISI llpCHARTERED ACCOUNTANTS

PMT 905 522 6555 F 905 522 6574 6th Floor, One James Street South Hamilton ON L8P 4R5

Independent Auditor's Report, continued

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position ofCanadian Friends of Tel Aviv University Inc. as at September 30, 2015, and the results of its operationsand its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Other Matter

The statement of financial position and statement of changes in net assets as at September 30, 2014, andthe statements of financial activities and cash flows for the year ended September 30, 2014, were auditedby another firm of Chartered Professional Accountants.

L.L- r

Chartered Accountants

Licensed Public Accountants Hamilton, Ontario

Canadian Friends of Tel Aviv University Inc.

Statement of Financial Position

Assets

Current assets

Cash and cash equivalentsShort term investments (Note 3)GST/HST/QST public service bodies rebate receivableDonations receivable

Prepaid expensesRestricted cash - to be remitted to TAU (Note 4)

Restricted investments - endowment (Note 5)

Furniture, fixtures and computer equipment (Note 6)

Liabilities

Current liabilities

Accounts payable and accrued liabilitiesRestricted contributions - payable to TAU (Note 7)

Net assets

Endowment Fund (Note 5)Operating Fund

Lease commitments (Note 8)

Subsequent event (Note 9)

APPROVED BY THE BOARD:

September 302015 2014

(Note 2)

$ 289,53728,10819.64319.830

396.134

$ 339,18017,64912,068

1,664

109,228

753,252 479,789

314,222 304,693

2.568 2,715

$1,070,042 $ 787.197

$ 64,285 $ 30,166396.134

460.419

314.222295.401

609.623

30.166

304,693452.338

757,031

$1.070.042 $ 787.197

Director

Director


Statement of changes in Net Assets

Balance, beginning of year

Impact of prior period adjustment

Balance, beginning of year - restated

Excess (deficiency) of donations overexpenses - Operating Fund

Excess of revenues over expenses- Endowment Fund

Investment in capital assets

Balance, end of year

Operating Fund Endowment

Fund

Year ended J

2015

September 30Invested in 2014

Capital Assets Unrestricted Restricted Total (Note 5) (Note 2)

$ 2,715 $ 340,395 $ 109,228 $ 452.338 $ 304,693 $ 757,031 $ 585,001

- - - - - 95,339

2.715 340.395 109,228 452,338 304,693 757.031 680,340

(712) (46,997) (109,228) (156,937) (156,937) 69,738

9,529 9,529 6,953

565 i5651

$ 2,568 $ 292,833 $ $ 295,401 $ 314,222 $ 609,623 $ 757,031


Statement of Financial Activities

Operating Fund

Year ended September 30,2015

Unrestricted Restricted Total

Year ended September 30,2014

Unrestricted Restricted Total

(Note 2)

Donations 90.888 $ 1,951.510 $ 2.042.398 $ 72.856 $ 1.529.412 $ 1.602.268

Expenses

Donations forwarded to TAU 11,899 2.056.490 2,068.389 3,754Salaries, wages and benefits 311.968 - 311,968 287.481Fundraising activities 76,174 - 76,174 39,261Rent and occupancy costs 30.070 - 30,070 28.416Travel and accommodation 23.032 4.248 27.280 45,985Office and general 24.463 - 24,463 38.400Professional fees 20.395 - 20,395 47.661Scholarships 15.622 - 15.622 6.610Advertising and promotion 10.614 - 10.614 10.845Telephone and internet 9.123 - 9.123 11.750Interest and bank charges 5.634 - 5.634 1,846Insurance 4,715 - 4.715 3.417Amortization 712 - 712 829

Interest income (147) - (147) (176)Gain on foreign exchange (8.349) - (8.349) (29.705)Recovery of expenses (397.328) - (397.328) (384.028)

138.597 2.060.738 2.199.335 112.346

1.420.184

1.420.184

1,423.938287.481

39,26128,41645.98538.40047,661

6.61010.84511.750

1,8463.417

829

(176)(29.705)

(384.028)

1.532.530

Excess (deficiency) of donationsover expenses for the year (47.709) $ (109,228) $ (156.937) $ (39.490) $ 109.228 $ 69.738

Canadian Friends of Tei Aviv University Inc.

Statement of Financial Activities

Endowment Fund

Investment revenue

Change in unrealized gains on investmentsInterest and investment income

(Loss) gain on sale of investments

ExpensesRemitted to Tel Aviv University for scholarships

Excess of revenue over expenses

Year ended September 302015 2014

$ 12,974 $ 25,1681.763 2.399

(5.208) 9,386

9.529 36,953

_

$

(30,000)

$ 9,529 6,953


Statement of Cash Flows

Cash flows from (used in) operating activitiesExcess (deficiency) of donations over expenses - Operating FundExcess of revenue over expenses - Endowment FundItems not involving cash

Amortization

Loss (gain) on disposition of investmentsUnrealized gain on change in fair value of investments

Net change in non-cash working capital balances relating tooperationsDecrease (increase) in public service bodies rebate receivableIncrease in donations receivable

Decrease (increase) in prepaid expensesIncrease (decrease) in accounts payable and accrued liabilitiesIncrease (decrease) in restricted contributions - payable to TAU

Cash flows from (used in) investing activitiesPurchase of equipmentProceeds on disposal of investmentsPurchase of investments

Net increase (decrease) in cash during the year

Cash at beginning of the year

Cash at end of the year

Cash consists of

Cash and cash equivalentsRestricted cash - to be remitted to TAU

Year ended September 302015 2014

$ (156,937) $ 69,7389,529 6,953

712 829

5,280 (9,386)(12.974) (25.168)

(154.390) 42.966

(7,575) 6,078(19,830) -

1,664 (1,664)34,119 (17,125)

396,134 (354,568)

404.512 (367.279)

250,122 (324.313)

(565) (2,265)15,951 45,698(28,245) (18.223)

(12.859) 25.210

237,263 (299,103)

448.408 747.511

$ 685,671 $ 448,408

$ 289,537 $ 339,180396,134 109.228

$ 685.671 $ 448.408

Canadian Friends of Tel Aviv University Inc. Page 1

Notes to Financial Statements

September 30, 2015

Nature of operations

Canadian Friends of Tel Aviv University Inc. (the "Organization") was incorporated under Part II of theCanada Corporations Actand is a registered not-for-profit organization and a registered charity and thus isexempt from income taxes under the Income Tax Act.

The Organization's purpose is to raise funds on behalf of Tel Aviv University in Israel.

1. Significant accounting policies

These financial statements are prepared in accordance with Canadian accounting standards fornot-for-profit organizations. The significant policies are detailed as follows:

Cash and cash equivalents

Cash and cash equivalents include balances with banks, net of outstanding cheques and short-term investments with maturities of 120 days or less.

Short term/restricted investments

Investments consist of mutual funds and GIC's which are measured at fair value.

Furniture, fixtures and computer equipment

Furniture, fixtures and computer equipment are recorded at cost. The Organization provides foramortization using the declining balance method at rates designed to amortize the cost of thefurniture, fixtures and computer equipment over their estimated useful lives. The annualamortization rates are as follows:

Furniture and fixtures 20%Computer equipment 30%

Expenditures for repairs and maintenance are charged to income.

Revenue recognition

The Organization follows the deferral method of accounting for contributions. Restrictedcontributions are recognized as revenue of the Restricted Operating Fund in the year in which therelated expenses are incurred. Unrestricted contributions are recognized as revenue of theUnrestricted Operating Fund when received or receivable if the amount to be received can bereasonably estimated and collection is reasonably assured.

Investment income earned on endowment contributions is recognized as revenue of theEndowment Fund in the year in which it is earned. Investment income earned on unrestrictedcontributions is recorded as revenue of the Unrestricted Operating Fund in the year in which it isearned.



September 30, 2015

1. Significant accounting policies, continued

Operating Fund

Revenue and expenses related to the day-to-day activities of the Organization are reported in theUnrestricted Operating Fund.

Restricted Operating Fund

Donations received in which have been designated for a specific purpose are reported in theRestricted Operating Fund.

Endowment Fund

An endowmentfund was created to hold funds that were contributed to the Organization bywayofbequests or designated donations. Investment income earned by the fund is to be spent inaccordance with the donors restrictions.

Foreign currency transactions

These financial statements have been presented in Canadian dollars, the principal currencyof theOrganization's operating.

Transaction amounts denominated in foreign currencies are translated into their Canadian dollarequivalents at the exchange rates prevailing at the transactions dates. Carrying values ofmonetary assets and monetary liabilities reflect the exchange rates at the statement of financialposition date. Gains and losses on translation or settlement are included in the determination ofexcess of revenues over expenses for the current period.

Contributed property and services

Contributions of materials and services are recognized in the financial statements at fair value atthe date of contribution, but only when a fair value can be reasonably estimated and when thematerials and services are used in the normal course of operations, and would otherwise havebeen purchased.

Volunteers contributed time to assist the Organization in carryingout its purpose. Because of thedifficulty of determining their fair value, volunteer services are not recognized in the financialstatements.

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 thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thebalance sheet date and the reported amounts of revenues and expenses during the year. Actualresults could differ from those estimates.



September 30, 2015

1. Significant accounting policies, continued

Financial instruments

Measurement of financial instruments

The Organization initially measures its financial assets and liabilities at fair value,.

The Organization subsequently measures all its financial assets and financial liabilities at cost oramortized cost, except for investments in equity instruments that are quoted in an active marketwhich are measured at fair value. Changes in fair value are recognized in excess (deficiency) ofdonations over expenses in the period incurred.

Financial assets measured at amortized cost include cash and cash equivalents, GST/HST/QSTpublic service bodies rebate receivable and donations receivable.

Financial liabilities measured at amortized cost include accounts payable and accrued liabilitiesand restricted contributions - payable to TAU.

Financial assets measured at fair value include short term investments and restricted investments- endowment.

Impairment

For financial assets measured at cost or amortized cost, the Organization determines whetherthere are indications of possible impairment. When there is an indication of impairment and theOrganization determines that a significantadverse change has occurred during the period in theexpected timing or amount of future cash flows, a write-down is recognized in excess (deficiency)of donations over expenses. A previously recognized impairment loss may be reversed to theextent of the improvement. The carrying amount of the financial asset may not be greater than theamount that would have been reported at the date of the reversal had the impairment not beenrecognized previously. The amount of the reversal is recognized in excess (deficiency) ofdonations over expenses.

Transaction costs

Transaction costs related to financial instruments that will be subsequently measured at fair valueare recognized in net income in the period incurred. Transaction costs related to financialinstruments subsequently measured at amortized cost are included in the original cost of theasset or liability and recognized in net income over the lifeof the instrument using the straight-linemethod.



September 30.2015

2. Prior period adjustment

The comparative figures in the financial statements for September 30, 2014 have beencorrected due to consolidation of the financial results of the Tel Aviv University-OverseesStudent Program (OSP). During the current fiscal year management hired a legal consultant todetermine the Organizations legal relationship with OSP. The Legal consultant determined thatthere is no legal connection to OSP. As a result of the removal of OSP financial statements, thefollowing adjustments were made:

Changes to the statement of Financial Position as at September 30, 2014:

GST/HST/QST public servicebodies rebate receivable

Furniture, fixtures and computerequipment

Due to Tel Aviv University

Reported2014 Adjustment

Restated

2014

$ 17,163 $ (5,095) $ 12,068

2,807(106.980)

(92)106.980

2,715

Total increase in 2014 Net Assets $ 101.793

Changes to the statement of financial activities for the year ended September 30, 2014:

Reported Restated2014 Adjustment 2014

Interest Income $ 6,906 $ (6,730) $ 176Rent and occupancy costs (38,411) 9,995 (28,416)Professional fees (50,811) 3,150 (47,661)Amortization (868) 39 (829)

Total increase in 2014 excess of

donations over expenses $ 6.454

Changes to the statement of changes in Net Assets for the year ended September 30, 2014:

Reported Restated2014 Adjustment 2014

Opening equity adjustment $ 585,001 $ 95,339 $ 680,340Donations over expenses - Operating 63,284 6,454 69,738Revenue over expenses - Endowment 6.953 - 6.953

Total increase in 2014 Net Assets $ 655.238 $ 101.793 $ 757,031



September 30, 2015

3. Short term investments

As at September 30, 2015, short term investments consisted of:


GIC, bearing interest at 0.85%,maturing July 2016 $ 26,285 $ 15,826

State of Israel Bonds maturingDecember 2015 in the amountof $1,800 USD 1,823 1,823

$ 28,108 $ 17,649

4. Restricted cash - to be remitted to TAU

Restricted cash are donations that were received from the Organization's donors in which havebeen designed to be remitted to Tel Aviv University in Israel.

5. Endowment Fund

Contributions restricted for endowment consist of donations and bequests received by theOrganization where the principal is required to remain unspent. The investment income generatedfrom the endowments must be used in accordance with the purposes established by the donors.As of September 30, 2015 the endowment's investment income available for designed use is$44,222 (2014 - $34,693).

2015 2014

Principal $ 270,000 $ 270,000Investment income 44,222 34,693

$ 314,222 $ 304,693



September 30, 2015

6. Furniture, fixtures and computer equipment

Page 6

Furniture and fixtures

Computer equipment

Cost


(Note 2)Accumulated Net Book Net BookAmortization Value Value

$ 11,350 $ 9,848 $ 1,502 $ 1,87883716,729 15.663 1,066

$ 28,079 $ 25,511 $ 2,568 $ 2,715

Restricted contributions - payable to TAU

These amounts are collections from donors which have been designed by the donor to be paid toTAU for various different programs. The amount payable for each location is as follows:

Montreal office

Toronto office

2015

$ 235,422160,712

$ 396,134

Lease commitments

The Organization's total commitments, under various operating leases and property leaseagreements for the Toronto and Montreal offices, exclusive of occupancy costs, are as follows:

2016

2017

2018

2019

2020

Subsequent years

$ 26,07627,85823,70620,94420,3503,392

$ 122,326

The Toronto officesubleases excess officespace with another organization on a month to monthbasis. The sublease rental income in the amount of $848/month is applied as a reduction to therent and occupancy costs on the statement of financial activities.



September 30, 2015

9. Subsequent events

Subsequent to the year end, the Organization terminated an executive director and was offered$100,000 in consideration for termination. This offer was accepted and has been paid in fullsubsequent to year end.

The termination and offer occurred after year end and as such no amount has been accrued inthese financial statements.

10. Pledges

As at September 30, 2015, the Organization had pledges receivable amounting to approximately$1,450,000 (2014 - $1,676,000). These pledges are not included in the financial statementsbecause their ultimate collection cannot be reasonably assured.

11. Financial instruments

Transactions in financial instruments may result in an entity assuming or transferring to anotherparty one or more of the financial risks. The required disclosures provide information that assistsusers of financial statements in assessing the extent of risk related to financial instruments.

Foreign exchange risk

The Organization is exposed to foreign exchange risk in United States dollars. Foreign exchangerisk is the risk that the exchange rate that was in effect on the date that an obligation in a foreigncurrency was made to the Organization by a donor, or that an obligation in a foreign currency wasmade to the Organization to a recipient, is different at the time of settlement than it was at timethat the obligation was determined. The Organization reduces its exposure to foreign exchangerisk by carefully monitoring exchange rates on obligations that are made to the Organization. TheOrganization does not utilize financial instruments to manage its foreign exchange risk. TheOrganization maintains adequate foreign currency balances in its bank provided by its donors.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in foreign exchange rates. At September 30, 2015 the Organizationheld cash and cash equivalents, including restricted cash, in USD at a value of of $132,768 CAD(2014-$89,818).

Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changesin market prices, whether the factors are specific to the instrument or all instruments traded in themarket. This risk is mitigated as the Organization follows a capital preservation investmentstrategy and performs regular review and re-balancing of its investment portfolio.



September 30, 2015

11. Financial instruments, continued

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected bya change in the interest rates. Changes in market interest rates may have an effect on the cashflows associated with some financial assets and liabilities, known as cash flow risk, and on the fairvalue of other financial assets or liabilities, known as price risk.

The Organization is exposed to interest rate cash flow risk with respect to fixed income securitiesheld. The Organization employs investment diversification to manage this risk.

12. Comparative figures

The financial statements have been reclassified, where applicable, to conform to the presentationused in the current year. Excluding the changes disclosed in Note 2, these reclassifications donot affect prior year earnings.

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