annual audit

Council approves financial statements

College Council has approved the annual report prepared by its auditors and allocated College equity into various reserve funds.

Finance Committee Chair John Tucker outlined the preparation that went into producing the report, including recommendations to put members’ equity into selective reserves to indicate possible future use.

“We are in the first year of the three-year budget cycle, with an expected operating surplus. One year from now we will place this surplus into the fee stabilization reserve,” Tucker said. “2010 is planned at break-even, and the 2009 surplus will be used in 2011 where we expect a matching deficit, so that the three-year budget cycle of revenue and expenses will be balanced.”

Council set a working capital reserve of $3,188,000 – a “very conservative allocation,” Tucker said – to provide for the College’s day-to-day operations and allocated $9,498,000 to its reserve for the stabilization of facility costs. Council maintained an unappropriated reserve of $500,000 for use as a general contingency fund. These unappropriated funds can be used at Council’s discretion to support unbudgeted projects it deems worthy.

The Finance Committee met in early March to review the findings of the auditors and the draft audited financial statements for 2008, and to conduct a regular review of financial assumptions in a building-acquisition model.

The original budget and the final audited statement, in both revenue and expenses, were “remarkably close” in an extremely tight budget year, Tucker said.

College membership stood at 219,819, providing solid member revenues, he said. “Softness in interest return from investments due to the overall economy was balanced by strong advertising. Revenue was two per cent over budget.”

Expenses for the year were within one per cent of the finance-approved budget. Investigations and Hearings costs exceeded budget by seven per cent owing to workload, new staffing and the successful plan to reduce a backlog of investigations. Reductions in other expenses offset the Investigations and Hearings increase.

On an operating base of $30 million, the final bottom line deviated from the plan by only $169,000, Tucker said.

Terry McKinnon, a partner with PricewaterhouseCoopers, confirmed the College’s clean audit and said the College was in the top 10 per cent of the companies the accounting firm audits.