Consolidated Financial Statements of JUSTICE INSTITUTE OF BRITISH COLUMBIA Year ended March 31, 2019 KPMG LLP PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada Telephone (604) 691-3000 Fax (604) 691-3031 INDEPENDENT AUDITORS’ REPORT To the Board of Governors of Justice Institute of British Columbia, and To the Minister of Advanced Education, Skills and Training, Province of British Columbia Opinion We have audited the consolidated financial statements of Justice Institute of British Columbia (the “Institute”), which comprise: • the consolidated statement of financial position as at March 31, 2019 • the consolidated statement of operations and accumulated surplus for the year then ended • the consolidated statement of changes in net debt for the year then ended • the consolidated statement of cash flows for the year then ended • and notes to the consolidated financial statements, including a summary of significant accounting policies (hereinafter referred to as the “financial statements”). In our opinion, the accompanying financial statements as at and for the year ended March 31, 2019 of the Institute are prepared, in all material respects, in accordance with the financial reporting provisions of Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of the Financial Statements” section of our auditors’ report. We are independent of the Institute in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP. Justice Institute of British Columbia Page 2 Emphasis of Matter – Financial Reporting Framework We draw attention to Note 2(a) to the financial statements which describes the applicable financial reporting framework and the significant differences between that financial reporting framework and Canadian public sector accounting standards. Our opinion is not modified in respect of this matter. Responsibilities of Management and Governance for the Financial Statements Those Charged with Management is responsible for the preparation of the financial statements in accordance with the financial reporting provisions of Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia 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. In preparing the financial statements, management is responsible for assessing the Institute’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Institute or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Institute’s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Justice Institute of British Columbia Page 3 • Obtain an understanding of internal control relevant to the audit 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 Institute’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Institute’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Institute to cease to continue as a going concern. • Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. Chartered Professional Accountants Vancouver, Canada June 6, 2019 JUSTICE INSTITUTE OF BRITISH COLUMBIA Consolidated Statement of Financial Position March 31, 2019, with comparative information for 2018 2019 2018 $ 13,330,284 2,000,000 2,784,595 108,779 18,223,658 $ 13,046,862 1,500,000 2,604,316 115,592 17,266,770 Accounts payable and accrued liabilities Employee future benefits (note 4(b)) Deferred revenue Deferred capital contributions (note 5) 5,304,064 1,117,000 7,330,267 20,739,036 34,490,367 5,505,274 900,000 7,235,373 22,264,338 35,904,985 Net debt (16,266,709) (18,638,215) 38,368,152 171,444 424,229 38,963,825 39,455,206 203,430 461,582 40,120,218 $ 22,697,116 $ 21,482,003 Financial assets Cash Investments (note 3) Accounts receivable Inventories for resale Liabilities Non-financial assets Tangible capital assets (note 6) Inventories held-for-use Prepaid expenses Contractual obligations (note 9) Accumulated surplus See accompanying notes to consolidated financial statements. Approved on behalf of the Board: Sukhminder Virk Chair Jackie Gorton Finance and Audit Committee Chair 1 JUSTICE INSTITUTE OF BRITISH COLUMBIA Consolidated Statement of Operations and Accumulated Surplus Year ended March 31, 2019, with comparative information for 2018 Budget (note 2(b)) Revenue: Province of British Columbia annual grant Province of British Columbia contract services Tuition and student fees Sales of goods and services Donations, non-government grants and contracts Investment income Amortization of deferred capital contributions (note 5) Other $ 12,797,590 Expenses: Ancillary operations Instructional/educational Sponsored research Annual surplus Accumulated surplus, beginning of year Accumulated surplus, end of year $ $ 13,277,172 2018 $ 11,433,301 7,798,271 13,502,401 1,090,660 8,315,180 14,135,702 1,479,441 7,493,402 14,079,339 1,102,475 10,985,390 90,000 12,605,276 272,106 15,255,804 153,705 2,909,753 604,776 49,778,841 2,045,693 556,924 52,687,494 2,064,837 481,818 52,064,681 1,535,904 47,138,382 824,555 49,498,841 1,542,328 49,228,501 701,552 51,472,381 1,303,587 48,760,565 915,658 50,979,810 280,000 1,215,113 1,084,871 21,482,003 21,482,003 20,397,132 21,762,003 See accompanying notes to consolidated financial statements. 2 2019 $ 22,697,116 $ 21,482,003 JUSTICE INSTITUTE OF BRITISH COLUMBIA Consolidated Statement of Changes in Net Debt Year ended March 31, 2019, with comparative information for 2018 Budget (note 2(b)) Annual surplus 2019 $ 280,000 Acquisition of tangible capital assets Proceeds from disposal of tangible capital assets Amortization of tangible capital assets Gain on disposal of tangible capital assets Acquisition of inventories held-for-use Consumption of inventories held-for-use Acquisition of prepaid expenses Use of prepaid expenses (1,699,894) 2,909,753 - (1,976,149) 3,063,203 (194,956) 226,942 (1,624,051) 1,661,404 (1,963,392) 12,692 3,029,766 (12,062) (249,824) 264,924 (1,817,290) 1,905,164 Decrease in net debt 1,489,859 2,371,506 2,254,849 (18,638,215) (18,638,215) (20,893,064) $ (17,148,356) $ (16,266,709) $ (18,638,215) Net debt, beginning of year Net debt, end of year See accompanying notes to consolidated financial statements. 3 $ 1,215,113 2018 $ 1,084,871 JUSTICE INSTITUTE OF BRITISH COLUMBIA Consolidated Statement of Cash Flows Year ended March 31, 2019, with comparative information for 2018 2019 2018 Cash provided by (used in): Operating activities: Annual surplus Items not involving cash: Amortization of tangible capital assets Gain on disposal of tangible capital assets Amortization of deferred capital contributions Amortization of deferred lease inducement Change in employee future benefits Changes in non-cash operating working capital: Increase in accounts receivable Decrease in inventories held for resale Increase (decrease) in accounts payable and accrued liabilities Increase in deferred revenue Decrease in inventories held for use Decrease in prepaid expenses Net change in cash from operating activities $ 1,215,113 $ 1,084,871 3,063,203 (2,045,693) 217,000 3,029,766 (12,062) (2,064,837) (51,750) (65,000) (180,279) 6,813 (195,120) 19,172 (201,210) 94,894 31,986 37,353 2,239,180 517,305 1,143,534 15,100 87,874 3,508,853 (1,976,149) (1,976,149) 12,692 (1,963,392) (1,950,700) Investing activities: Redemption (purchase) of investments Net change in cash from investing activities (500,000) (500,000) 500,000 500,000 Financing activities: Repayment of obligation under capital lease Deferred capital contributions received Net change in cash from financing activities 520,391 520,391 (296,578) 1,401,190 1,104,612 Net change in cash 283,422 3,162,765 13,046,862 9,884,097 $ 13,330,284 $ 13,046,862 Capital activities: Proceeds from disposal of tangible capital assets Cash used to acquire tangible capital assets Net change in cash from capital activities Cash, beginning of year Cash, end of year See accompanying notes to consolidated financial statements. 4 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements Year ended March 31, 2019 1. Purpose of the Institute: The Justice Institute of British Columbia (the “Institute”) is a post-secondary educational institution established in 1978 by the Province of British Columbia (the “Province”) under the provisions of the College and Institute Act. The Institute is exempt from income tax under Section 149 of the Income Tax Act. The mission of the Institute is to provide learning opportunities for practitioners and the public that lead to improved justice and public safety services, and safer communities. 2. Significant accounting policies: (a) Basis of accounting: The consolidated financial statements reflect the assets, liabilities, revenues, expenses and accumulated surplus of the Institute and JI Ventures Inc., an organization that is wholly-owned by the Institute. JI Ventures Inc. was incorporated on January 18, 2017 and had no financial activity in the years ended March 31, 2019 and 2018. The consolidated financial statements have been prepared in accordance with Section 23.1 of the Budget Transparency and Accountability Act of the Province supplemented by Regulations 257/2010 and 198/2011 issued by the Province Treasury Board. The Budget Transparency and Accountability Act requires that the consolidated financial statements be prepared in accordance with the set of standards and guidelines that comprise generally accepted accounting principles for senior governments in Canada, or if the Treasury Board makes a regulation, the set of standards and guidelines that comprise generally accepted accounting principles for senior governments in Canada as modified by the alternate standard or guideline or part thereof adopted in the regulation. Regulation 257/2010 requires all tax-payer supported organizations in the Schools, Universities, Colleges and Hospitals sectors to adopt Canadian public sector accounting standards without any PS4200 standards for government not-for-profit organizations. Regulation 198/2011 requires that restricted contributions received or receivable are to be reported as revenue depending on the nature of the restrictions on the use of the funds by the contributors as follows: (i) Contributions for the purpose of acquiring or developing a depreciable tangible capital asset or contributions in the form of a depreciable tangible capital asset are recorded and, referred to as deferred capital contributions and recognized in revenue at the same rate that amortization of the related tangible capital asset is recorded. The reduction of the deferred capital contributions and the recognition of the revenue are accounted for in the fiscal period during which the tangible capital asset is used to provide services. (ii) Contributions restricted for specific purposes other than those for the acquisition or development of a depreciable tangible capital asset are recorded as deferred contributions and recognized in revenue in the year in which the stipulation or restriction on the contributions have been met. 5 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 2. Significant accounting policies (continued): (a) Basis of accounting (continued): For British Columbia tax-payer supported organizations, these contributions include government transfers and externally restricted contributions. The accounting policy requirements under Regulation 198/2011 are significantly different from the requirements of Canadian public sector accounting standards which require that: • Government transfers that do not contain a stipulation that creates a liability, be recognized as revenue by the recipient when approved by the transferor and the eligibility criteria have been met in accordance with public sector accounting standard PS3410; and • Externally restricted contributions be recognized as revenue in the period in which the resources are used for the purpose or purposes specified in accordance with public sector accounting standard PS3100. As a result, revenue recognized in the consolidated statement of operations and certain related deferred capital contributions would be recorded differently under Canadian public sector accounting standards. (b) Budget figures: Budget figures have been provided for comparative purposes and reflect the fiscal 2019 budget approved by the Board of Governors of the Institute on March 29, 2018. The budget is reflected in the consolidated statement of operations and accumulated surplus and the consolidated statement of changes in net debt and may include adjustments to conform to the consolidated financial statement presentation. (c) Financial instruments: Financial instruments are classified into two categories: fair value or cost. (i) Fair value category: Includes investments that are quoted in an active market and derivative instruments reflected at fair value as at the reporting date. Sales and purchases of investments are recorded on the trade date. Transaction costs related to the acquisition of investments is recorded as an expense. Unrealized gains and losses on financial assets would be recognized in the statement of re-measurement gains and losses until such time that the financial asset is de-recognized due to disposal or impairment. At the time of derecognition, the related realized gains and losses are recognized in the statement of operations and accumulated surplus. There are no unrealized gains or losses as at March 31, 2019. As a result, the Institute does not have a statement of re-measurement gains and losses. (ii) Cost category: Gains and losses are recognized in the statement of operations and accumulated surplus when the financial asset is derecognized due to disposal or impairment. Sales and purchases of investments are recorded on the trade date. Transaction costs related to the acquisition of investments is included in the cost of the related investments. 6 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 2. Significant accounting policies (continued): (d) Inventories for resale: Inventories held for resale, including books and gift shop items, are recorded at the lower of cost or net realizable value. Cost is determined based on weighted average costing. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses. When conditions indicate that losses previously recognized have been recovered, the loss is reversed to the extent of the amount recovered. (e) Employee future benefits: The Institute and its employees make contributions to the College Pension Plan and Municipal Pension Plan, which are multi-employer joint trustee plans. These plans are defined benefit plans. As the assets and liabilities of the plans are not segregated by institution, the plans are accounted for as defined contribution plans and any contributions of the Institute to the plans are expensed as incurred. Certain employees are entitled to earned benefits related to retirement allowances, vacation in year of retirement benefits, and continuation of benefits to employees on long-term disability. The costs of these benefits are actuarially determined based on service and best estimates of retirement ages and expected future rate of compensation increases. The obligation under these benefit plans are accrued based on projected benefits as the employees render services necessary to earn the future benefits. Actuarial gains and losses are amortized over the expected average remaining service life of the employees. The employee future benefits are unfunded. (f) Liability for contaminated sites: A liability for contaminated sites is recognized when a site is not in productive use and the following criteria are met: • An environmental standard exists; • Contamination exceeds the environmental standard; • The Institute is directly responsible or accepts responsibility; • It is expected that future economic benefits will be given up; and • A reasonable estimate of the amount can be made. The liability is recognized as management’s estimate of the cost of post-remediation including operation, maintenance and monitoring that are an integral part of the remediation strategy for a contaminated site. 7 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 2. Significant accounting policies (continued): (g) Non-financial assets: Non-financial assets are not available to discharge existing liabilities and are held for use in the provision of services. They may have useful lives extending beyond the current year and are not intended for sale in the ordinary course of operations. (i) Tangible capital assets: Tangible capital assets are recorded at cost less accumulated amortization, which includes amounts that are directly attributable to acquisition, construction, development or betterment of the asset. Interest is capitalized whenever external debt is issued to finance the construction of tangible capital assets. Donated assets are recorded at fair value at the date of donation. In unusual circumstances where fair value cannot be reasonably determined, the tangible capital asset would be recognized at nominal value. The cost, less residual value, of the tangible capital assets, excluding land, is amortized on a straight line basis over their estimated useful lives shown below: Asset Rate Site improvements 10 years Buildings 20 to 40 years Furniture, equipment and vehicles (including computer equipment) 3 to 10 years Personal computer equipment and peripherals 3 years Computer software 10 years Leasehold improvements Lesser of lease term and useful life Assets under construction are not amortized until the asset is available for productive use. Interest costs directly attributable to construction projects and major capital acquisitions are capitalized from the commencement of the capital outlays until the assets are placed into service. Tangible capital assets are written down when conditions indicate that they no longer contribute to the Institute’s ability to provide goods and services, or when the value of future economic benefits associated with the tangible capital assets is less than their net book value. (ii) Leased tangible capital assets: Leases that transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as leased tangible capital assets. All other leases are accounted for as operating leases and the related payments are charged to expenses as incurred. 8 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 2. Significant accounting policies (continued): (g) Non-financial assets (continued): (iii) Inventories held for use: Inventories held for use are recorded at the lower of cost and replacement value. Cost includes the original purchase cost. Replacement value is the estimated current price to replace the items. (h) Revenue recognition: Tuition and student fees and sales of goods and services are reported as revenue at the time the services are provided or the products are delivered, and collection is reasonably assured. Fees received prior to the year-end where the course is delivered subsequent to the year-end are recorded as deferred revenue. Contract revenues are recognized in the period in which the related activities are performed. The zero profit margin method is used when a contract’s financial outcome is not reasonably determinable. This method of accounting requires that equal amounts of revenue and expense be recognized until the financial outcome of a contract can be reasonably estimated. Provision for anticipated losses is made in the period in which they become evident. Unrestricted donations and grants are recorded as revenue when receivable if the amounts can be estimated and collection is reasonably assured. Restricted donations and grants are reported as revenue depending on the nature of the restrictions on the use of the funds by the contributors as follows: (i) Contributions for the purpose of acquiring or developing a depreciable tangible capital asset or contributions in the form of a depreciable tangible capital asset are recorded as deferred capital contributions and recognized in revenue at the same rate that amortization of the related tangible capital asset is recorded. The reduction of the deferred capital contributions and the recognition of the revenue are accounted for in the fiscal period during which the tangible capital asset is used to provide services. (ii) Contributions restricted for specific purposes other than for the acquisition or development of a depreciable tangible capital asset are recorded as deferred revenue and recognized in revenue in the year in which the stipulation or restriction on the contribution have been met. Investment income includes interest recorded on an accrual basis. 9 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 2. Significant accounting policies (continued): (i) Use of estimates: The preparation of the consolidated financial statements prepared in accordance with the basis of accounting described in note 2(a) requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, and related disclosures. Key areas where management has made estimates and assumptions include those related to the fair value of donated tangible capital assets, useful lives of tangible capital assets, accrued losses on contracts, employee future benefits payable and provision for contingencies. Where actual results differ from these estimates and assumptions, the impact will be recorded in future periods when the difference becomes known. (j) Foreign currency translation: The Institute’s functional currency is the Canadian dollar. Foreign currency transactions are translated at the exchange rates prevailing at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the financial statement date. Any gain or loss resulting from a change in rates between the transaction date and the settlement date or statement of financial position date is recognized in the consolidated statement of re-measurement gains and losses. There are no unrealized gains or losses as at March 31, 2019. As a result, the Institute does not have a statement of re-measurement gains and losses. 3. Investments: Investments are comprised of guaranteed investment certificates that earn interest at rates between 2.20% and 2.63% (2018 - 1.64% and 2.00%) and mature between May 27, 2019 and March 25, 2020 (2018 - July 28, 2018 and March 20, 2019). 4. Employee future benefits: (a) Pension benefits: The Institute and its employees contribute to the College Pension Plan and Municipal Pension Plan, jointly trusteed pension plans (together referred to as the “Plans”). The boards of trustees for these Plans representing plan members and employers, are responsible for the management of the Plans including investment of the assets and administration of benefits. The Plans are multi-employer contributory pension plans. Basic pension benefits provided are based on a formula. As at August 31, 2018, the College Pension Plan has about 14,000 active members, and approximately 8,000 retired members. As at December 31, 2017, the Municipal Pension Plan has about 197,000 active members, including approximately 6,000 from colleges. 10 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 4. Employee future benefits (continued): (a) Pension benefits (continued): The most recent actuarial valuation for the College Pension Plan as at August 31, 2015 indicated a $67 million surplus for basic pension benefits on a going concern basis. The next valuation will be as at August 31, 2018 with results available in 2019. The most recent actuarial valuation for the Municipal Pension Plan as at December 31, 2015 indicated a $2,224 million funding surplus for basic pension benefits on a going concern basis. The next valuation will be as at December 31, 2018 with results available in 2019. Employers participating in the Plans record their pension expense as the amount of employer contributions made during the fiscal year (defined contribution pension plan accounting). This is because the Plans record accrued liabilities and accrued assets for the Plans in aggregate, with the result that there is no consistent and reliable basis for allocating the obligations, assets and costs to individual entities participating in the Plans. During the year ended March 31, 2019, the Institute paid $2,130,797 (2018 - $2,001,042) for employer contributions to the Plans. (b) Other employee future benefits: Certain employees are entitled to earned benefits related to retirement allowances, vacation in year of retirement benefits, and continuation of benefits to employees on long-term disability. The costs of these benefits are actuarially determined based on service and best estimates of retirement ages and expected future rate of compensation increases. The obligations under these benefit plans are accrued based on projected benefits as the employees render services necessary to earn the future benefit. The Institute engaged the services of an actuarial firm to evaluate its employee future benefits. The liabilities reported are based on an actuarial valuation as at March 31, 2019. Information regarding the Institute’s obligations for these benefits is as follows: 2019 Accrued benefit obligation, beginning of year Current service and interest cost Benefit payments Actuarial loss (gain) Accrued benefit obligation, end of year Unamortized net actuarial gain Accrued benefit liability $ 842,000 83,000 (72,000) 223,000 $ 914,000 82,000 (71,000) (83,000) 1,076,000 842,000 41,000 58,000 $ 1,117,000 11 2018 $ 900,000 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 4. Employee future benefits (continued): (b) Other employee future benefits (continued): The significant actuarial assumptions adopted in measuring the Institute’s accrued benefit liability are as follows: Discount rate Expected future rate of compensation increase Expected average remaining service life of active members 2019 2018 2.805% 2.00% 12 years 2.712% 1.00% 12 years 2019 2018 5. Deferred capital contributions: Balance, beginning of year Contributions received during the year Amortization of deferred capital contributions $ 22,264,338 520,391 (2,045,693) $ 22,927,985 1,401,190 (2,064,837) Balance, end of year $ 20,739,036 $ 22,264,338 Included in the balance at March 31, 2019 are unspent deferred capital contributions of $285,000 (2018 - $745,000). 12 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 6. Tangible capital assets: Balance at March 31, 2018 Cost Land Site improvements Buildings Furniture, equipment and vehicles Personal computer equipment and peripherals Computer software Leasehold improvements Work in process $ 10,416,476 1,281,208 42,918,705 6,607,752 Additions, net of transfers $ 1,002,084 1,454,648 751,550 1,540,636 1,444,861 824,695 173,824 170,288 (824,695) $ 65,785,883 $ 1,976,149 Balance at March 31, 2018 Amortization expense Accumulated amortization Site improvements Buildings Furniture, equipment and vehicles Personal computer equipment and peripherals Computer software Leasehold improvements $ 816,022 20,096,721 3,573,233 $ 105,206 1,253,324 1,254,373 407,454 314,396 1,122,851 201,227 172,568 76,505 Total $ 26,330,677 $ 3,063,203 $ $ $ $ Disposals Balance at March 31, 2019 (93,835) (855,459) $ 10,416,476 1,187,373 43,920,789 7,206,941 (164,406) (511,081) - 760,968 1,710,924 933,780 - (1,624,781) $ 66,137,251 Disposals Balance at March 31, 2019 (93,835) (855,459) $ 827,393 21,350,045 3,972,147 (164,406) (511,081) 444,275 486,964 688,275 (1,624,781) $ 27,769,099 Net book value March 31, 2018 Net book value March 31, 2019 Land Site improvements Buildings Furniture, equipment and vehicles Personal computer equipment and peripherals Computer software Leasehold improvements Work in process $ 10,416,476 465,186 22,821,984 3,034,519 $ 10,416,476 359,980 22,570,744 3,234,794 344,096 1,226,240 322,010 824,695 316,693 1,223,960 245,505 - Total $ 39,455,206 $ 38,368,152 13 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 7. Credit facility: The Institute has available a demand operating loan up to a maximum of $250,000 which bears interest at bank prime per annum, and a letter of credit facility up to a maximum of $50,000, for its ongoing operating requirements. No amounts are outstanding under these banking facilities. 8. Related organization: The Justice Institute of B.C. Foundation (the “Foundation”) was formed to raise funds for furthering the interests of the Institute. The Foundation is governed by an independent board of directors, the voting members of which can include employees of the Institute. The fund balances and results of operations of the Foundation have not been included in these consolidated financial statements. During 2019, the Foundation contributed $965,649 (2018 - $662,030) in training equipment and student / applied research awards to the Institute. Administrative services, including salary costs, amounting to approximately $177,845 (2018 - $146,000), included in instruction/educational expense, were provided to the Foundation by the Institute on a no charge basis. The following is a summary of the financial information of the Foundation for the years ended March 31, 2019 and 2018: 2019 2018 Total assets $ 1,934,023 $ 1,716,624 Fund balances $ 1,934,023 $ 1,716,624 Total revenues Total expenses $ 1,322,144 1,104,743 $ 566,324 671,886 Excess (deficiency) of revenue over expenses $ 217,401 $ (105,562) 9. Contractual obligations: The nature of the Institute’s activities can result in multiyear contracts and obligations whereby the Institute will be committed to make future payments. Future payments relating to significant contractual obligations for operations, including lease commitments for facilities and office equipment, that can be reasonably estimated are as follows: 2020 2021 2022 2023 14 $ 524,355 507,597 383,520 218,414 $ 1,633,886 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 10. Contractual rights: The Institute’s contractual rights arise from contracts with the Province of British Columbia and other funders to deliver certain programs. The revenue from these agreements cannot be quantified because it is dependent on the program costs incurred and certain terms and conditions in the agreements. 11. Expenses by object: The following is a summary of expenses by object: 2019 Business development and promotion Contract instruction and program development Facilities and equipment Professional services Salaries and employee benefits Staff and faculty travel and meetings Student travel and activities Supplies - instructional Supplies - office Other Amortization of tangible capital assets 2018 $ 1,070,235 4,627,080 4,178,617 2,583,346 31,199,815 1,131,841 696,852 1,175,419 659,274 1,086,699 3,063,203 $ 1,264,435 4,781,456 3,630,326 2,014,779 28,996,541 1,115,672 707,636 1,370,021 773,722 3,295,456 3,029,766 $ 51,472,381 $ 50,979,810 12. WorkSafe BC: During fiscal 2019, WorkSafe BC provided funding of $1,438,858 (2018 - $1,428,350) that was recognized in contracts, grants and donations revenue for the operation of the Occupational Road Safety Initiatives Program. 13. Financial risk management: The Institute has exposure to the following risks from its use of financial instruments: credit risk, market risk and liquidity risk. The Board of Governors ensures that the Institute has identified its major risks and ensures that management monitors and controls them. (a) Credit risk: Credit risk is the risk of financial loss to the Institute if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Such risks arise principally from certain financial assets held by the Institute consisting of cash, investments and accounts receivable. The Institute assesses these financial assets, on a continuous basis for any amounts that are not collectible or realizable. 15 JUSTICE INSTITUTE OF BRITISH COLUMBIA Notes to Consolidated Financial Statements (continued) Year ended March 31, 2019 13. Financial risk management (continued): (b) Market risk: Market risk is the risk that changes in market prices, such as interest rates, will affect Institute’s income. The objective of market risk management is to control market risk exposures within acceptable parameters while optimizing the return on investment. It is management's opinion that the Institute is not exposed to significant market or interest rate risk arising from its financial instruments. (c) Liquidity risk: Liquidity risk is the risk that the Institute will not be able to meet its financial obligations as they become due. The Institute manages liquidity risk by continually monitoring actual and forecasted cash flows from operations and anticipated investing and financing activities to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Institute’s reputation. There has been no change to any of the risk exposures from 2018. 16