Financial Statements of
DOCTORS WITHOUT BORDERS CANADA/MÉDECINS SANS FRONTIÈRES CANADA Year ended December 31, 2009
KPMG LLP
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AUDITORS' REPORT To the Members of Doctors Without Borders Canada/ Médecins Sans Frontières Canada
We have audited the statement of financial position of Doctors Without Borders Canada/Médecins Sans Frontières Canada as at December 31, 2009 and the statements of operations, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of MSF Canada's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian 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 MSF Canada as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. As required by the Canada Corporations Act, we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding year.
Chartered Accountants, Licensed Public Accountants
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA (Incorporated under the laws of Canada) Statement of Financial Position December 31, 2009, with comparative figures for 2008 2009
2008
$ 7,768,414 22,448 1,572,864 324,429 9,688,155
$ 7,139,975 20,228 2,167,616 158,978 9,486,797
95,972
185,764
$ 9,784,127
$ 9,672,561
$ 6,316,625
$ 6,175,993
95,972 3,371,530 3,467,502
185,764 3,310,804 3,496,568
$ 9,784,127
$ 9,672,561
Assets Current assets: Cash and cash equivalents (note 3) Investments (note 4) Accounts receivable (note 5) Prepaid expenses
Capital assets (note 6)
Liabilities and Net Assets Current liabilities: Accounts payable and accrued liabilities (note 7) Net assets: Invested in capital assets Unrestricted
Commitments (note 13) Contingencies (note 14)
See accompanying notes to financial statements. On behalf of the Board: Director Director
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Statement of Operations Year ended December 31, 2009, with comparative figures for 2008
Revenue: Donations Support from Canadian International Development Agency (note 10) Grants from other MSF sections Interest Other
2009
2008
$ 22,968,026
$ 21,920,902
5,175,000 2,433,869 33,715 115,309 30,725,919
3,575,000 2,854,477 152,987 95,695 28,599,061
18,940,597 4,477,576 943,554 24,361,727
17,529,675 5,052,888 775,732 23,358,295
5,140,408 1,252,850 6,393,258 30,754,985
4,002,764 1,101,428 5,104,192 28,462,487
Expenses (note 12): Program services: Emergency, medical, nutrition and health projects (notes 10 and 11) Program support and development Public education
Supporting services: Fundraising Management and general
Excess of revenue over expenses (expenses over revenue)
$
See accompanying notes to financial statements.
2
(29,066)
$
136,574
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Changes in Net Assets Year ended December 31, 2009, with comparative figures for 2008
Net assets, beginning of year
2009
2008
Unrestricted
Invested in capital assets
Total
Total
$ 3,310,804
$ 185,764
$ 3,496,568
$ 3,359,994
Excess of revenue over expenses (expenses over revenue)
111,862
(140,928)
Purchase of capital assets
(51,136)
51,136
–
–
95,972
$ 3,467,502
$ 3,496,568
Net assets, end of year
$ 3,371,530
See accompanying notes to financial statements.
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$
(29,066)
136,574
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Statement of Cash Flows Year ended December 31, 2009, with comparative figures for 2008 2009
2008
Cash provided by (used in): Operating activities: Excess of revenue over expenses (expenses over revenue) Amortization of capital assets which does not involve cash Change in non-cash operating working capital: Accounts receivable Prepaid expenses Accounts payable and accrued liabilities
$
Investing activities: Sale (purchase) of investments, net Purchase of capital assets
Increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
$
See accompanying notes to financial statements.
4
(29,066)
$
136,574
140,928
126,317
594,752 (165,451) 140,632 681,795
(416,390) (43,700) 2,656,437 2,459,238
(2,220) (51,136) (53,356)
426,842 (72,792) 354,050
628,439
2,813,288
7,139,975
4,326,687
7,768,414
$
7,139,975
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements Year ended December 31, 2009
Doctors Without Borders Canada/Médecins Sans Frontières Canada ("MSF Canada") actively commenced operations on January 1, 1992. MSF Canada offers assistance to populations in distress, victims of natural or man-made disasters and victims of armed conflict, without discrimination and irrespective of race, religion, creed or political affiliation. MSF Canada is a registered charity under the Income Tax Act (Canada) and, while registered, is exempt from income taxes. 1.
Significant accounting policies: These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. The significant accounting policies are summarized as follows: (a) Financial instruments: All financial instruments are classified as either held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale or other financial liabilities. Financial instruments classified as held-for-trading are measured at fair value with unrealized gains and losses recognized in the statement of operations. Financial instruments classified as held-to-maturity investments, loans and receivables and other liabilities are measured at amortized cost. Financial instruments classified as available-for-sale are measured at fair value with the unrealized gains and losses recognized in the statement of changes in net assets. MSF Canada designated its cash and cash equivalents and investments as held-fortrading, which are measured at fair value, accounts receivable as loans and receivables, which are measured at amortized cost, and accounts payable and accrued liabilities as other financial liabilities, which are measured at amortized cost. Transaction costs that are directly attributable to the acquisition of investments are not considered significant and are expensed when paid. Investment purchase and sale transactions are accounted for on the trade date.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
1.
Significant accounting policies (continued): (b) Cash and cash equivalents: Cash and cash equivalents consist of cash on hand and short-term investments with original maturities of less than 90 days. (c) Capital assets: Capital assets consist of office equipment and leasehold improvements. These costs are capitalized and amortized on a straight-line basis using an estimated useful life of three years. (d) Revenue recognition: MSF Canada follows the deferral method of accounting for contributions. Unrestricted contributions are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Donations are recognized on a cash basis since pledges are not legally enforceable claims. Externally restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Interest income is recognized as revenue on an accrual basis. Grants from other MSF Canada sections are recognized as revenue when related expenses are incurred or services are provided. (e) Contributed materials and services: Doctors and other volunteers contribute a significant amount of time in support of MSF Canada. As this time cannot be easily valued, contributed services are not recognized in the financial statements. Contributed materials are also not recognized.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
1.
Significant accounting policies (continued): (f) Use of estimates: The preparation of financial statements 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 revenue and expenses during the year. Actual results could differ from those estimates.
2.
Change in accounting standards: Effective January 1, 2009, MSF Canada adopted the CICA amendments to the 4400 series of Handbook Sections for Not-For-Profit Entities and Section 1000, Financial Statement Concepts, of the CICA Handbook. The amendments to the 4400 Sections eliminate the requirement to show net assets invested in capital assets as a separate component of net assets, clarify the requirement for revenue and expenses to be presented on a gross basis when the not-for-profit organization is acting as principal and require a statement of cash flows. The amendments to Section 1000 of the CICA Handbook clarified the criteria for recognition of an asset or liability, removing the ability to recognize assets or liabilities solely on the basis of matching of revenue and expense items. Adoption of these recommendations had no significant impact on the financial statements for the year ended December 31, 2009.
3.
Cash and cash equivalents:
Cash Money market fund
2009
2008
$ 4,268,408 3,500,006
$ 6,239,971 900,004
$ 7,768,414
$ 7,139,975
At December 31, 2009, the money market fund yielded an effective interest rate of 0.90% (2008 - 3.49%).
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
4.
Investments: 2009 Market value Equities Mutual funds
2008 Cost
Market value
Cost
$
21,942 506
$
21,996 499
$ 19,695 533
$ 18,850 509
$
22,448
$
22,495
$ 20,228
$ 19,359
Equities represent gifts-in-kind donated at year end and sold subsequent to year end. 5.
Accounts receivable:
Donations receivable MSF Holland Other MSF organizations Other
6.
2008
840,427 281,275 369,141 82,021
$ 1,453,884 418,080 227,134 68,518
$ 1,572,864
$ 2,167,616
2009 Net book value
2008 Net book value
$
Capital assets:
Office equipment Leasehold improvements
7.
2009
Cost
Accumulated amortization
$ 485,975 250,772
$ 427,054 213,721
$
58,921 37,051
$
93,546 92,218
$ 736,747
$ 640,775
$
95,972
$
185,764
Accounts payable and accrued liabilities: Included in accounts payable and accrued liabilities is $5,503,472 (2008 - $5,760,182) in amounts owing to other MSF organizations, relating to shared grants and program expenditures. 8
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
8.
Financial instruments: (a) Investment risk management: Investments are primarily exposed to interest rate and market risk. MSF Canada has formal policies and procedures that address risk mitigation. (b) Fair values: The fair values of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to the short-term nature of these financial instruments. The fair values of investments are based on quoted market values, as disclosed in note 4. (c) Interest rate risk: Interest rate risk arises from the possibility that changes in interest rates will affect the value of fixed income securities held by MSF Canada. MSF Canada manages this risk by holding guaranteed investment certificates and by staggering the terms of the securities held. (d) Market risk: Market risk arises as a result of trading securities. Fluctuations in the market expose MSF Canada to a risk of loss. MSF Canada mitigates this risk through investing in guaranteed investment certificates.
9.
Capital management: In managing capital, MSF Canada focuses on liquid resources available for operations. MSF Canada's objective is to have sufficient liquid resources to continue operating and to provide it with the flexibility to take advantage of opportunities that will advance its purpose. The need for sufficient liquid resources is considered in the preparation of an annual budget and in the monitoring of cash flows and actual operating results compared to budget.
9
DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
10.
Canadian International Development Agency: MSF Canada solicits funds for projects being undertaken by MSF worldwide from Canadian International Development Agency ("CIDA"). CIDA funds a number of these projects and grants the funding to MSF Canada. MSF Canada retains 5% (2008 - 5%) of the CIDA funds to cover its project coordination, administration and overhead costs. MSF Canada enters into an agency agreement with the operational MSF section that will carry out the project and passes on the CIDA funds to that section. At the conclusion of the project, the operational section accounts for the funds to MSF Canada. MSF Canada reviews these accounts and presents them to CIDA. To the extent that the funds are not fully spent, they are returned by the operational section to MSF Canada and by MSF Canada to CIDA. 2009
2008
New grants recognized as revenue
$ 5,175,000
$ 3,575,000
Grants disbursed by country: Sudan Chad Sri Lanka Central African Republic Zimbabwe Myanmar (Burma) Mozambique Kenya
$ 1,235,000 1,140,000 1,116,250 950,000 475,000 – – –
$ 1,330,000 570,000 166,250 285,000 – 665,000 237,500 142,500
$ 4,916,250
$ 3,396,250
The grants disbursed are included in program services expenses - emergency and medical projects. For the year ended December 31, 2009, the difference between new grants recognized as revenue and grants disbursed represents project coordination, administration and overhead expenses totalling $258,750 (2008 - $178,750).
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIÈRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
11.
Emergency, medical, nutrition and health projects by country: 2009
Projects funded by CIDA (note 10) Democratic Republic of Congo Somali Guinea Niger Sudan (Darfur) Central African Republic Colombia Caucasus - Russia Pakistan Haiti Papua New Guinea Myanmar Zimbabwe South Sudan Kenya Chad Other: Access to essential medicines and Drugs for Neglected Diseases Initiative and Innovation Fund Other direct field costs
12.
$
4,916,250 2,500,000 2,150,000 1,370,000 1,016,000 1,000,000 – 1,000,000 1,000,000 712,760 500,000 500,000 500,000 500,000 500,000 143,335 –
2008
$
3,396,250 1,930,000 4,000,000 – 1,200,000 1,400,000 1,000,000 1,000,000 749,000 700,000 500,000 500,000 341,662 – – – 250,000
243,094 389,158
397,294 165,469
$ 18,940,597
$ 17,529,675
Expenses: MSF Canada classifies expenses on the statement of operations by function ("Program"). The entity allocates certain costs by identifying the appropriate basis of allocation and applying that basis consistently each year. These costs are prescribed by MSF International Accounting Standards ("MSF IAS"), developed and accepted by all MSF Sections for the purpose of producing recombined financial statements that are separately audited and certified. Administration costs, as prescribed by MSF IAS, that are not clearly assignable to a specific Program are grouped as common costs and reallocated to each Program on a consistent basis. The basis of allocation is an estimate of the percentage of usage of each Program according to space and staff numbers.
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DOCTORS WITHOUT BORDERS CANADA/ MÉDECINS SANS FRONTIĂˆRES CANADA Notes to Financial Statements (continued) Year ended December 31, 2009
12.
Expenses (continued): Common costs of $871,205 (2008 - $828,154) were allocated as follows: Allocation key Program services: Program support and development: Operating cell Human resources department Program unit Public development: Communications department Fundraising department Management, general and administration
13.
10% 25% 5% 15% 25% 20%
2009
$
87,121 217,801 43,560
2008
$
82,815 207,039 41,408
130,681 217,801 174,241
124,223 207,039 165,630
$ 871,205
$ 828,154
Commitments: MSF Canada has commitments for its leased premises and equipment. The future minimum annual lease payments under operating leases are as follows:
2010 2011 2012 2013 2014
$ 172,634 2,340 2,340 2,340 1,170 $ 180,824
14.
Contingencies: MSF Canada is involved in various legal actions that are normal to its business. In the opinion of management, any resulting liabilities are not expected to have a material adverse effect on the financial position or net operations.
12