THE PENTECOSTAL ASSEMBLIES OF CANADA FINANCIAL STATEMENTS
LLP Chartered Accountants
and Business Advisors People Count.
INDEPENDENT AUDITOR’S REPORT
To the members of: The Pentecostal Assemblies of Canada
We have audited the accompanying financial statements of The Pentecostal Assemblies of Canada, which comprise the statement of financial position as at December 31, 2013, and the statements of operating funds activity, operating funds balances, trust funds and property fund activity and fund balances and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not for profit organizations 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.
Auditor’s Responsibility
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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements present fairly, in all material respects, the financial position of The Pentecostal Assemblies of Canada as at December 31, 2013, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not for profit organizations.
Guelph, Ontario March 19, 2014
I~L~ LLI°
Chartered Accountants Licensed Public Accountants
THE PENTECOSTAL ASSEMBLIES OF CANADA Statement of Operating Funds Activities
Year ended December 31, 2013
Revenue (note 5) Donations - Missionaries International Missions Mission Canada Donations (note 18) District tithes Bequests
Sales and services (note 18) Investment revenues Credential fees
2013 2012
Shared Designated Operations Funding Funds
(note 3) (note 3) (note 3)
Total Total $ $9,805,462 $ - $9,805,462 $9,873,227 432,521 - 432,521 394,710 2,590,329 4,714,878 7,305,207 6,114,549 1,412,307 - 1,412,307 1,330,673 114,730 584,960 699,690 502,338 1,180,991 193,349 1,374,340 1,634,638 347,747 108,091 455,838 409,274 434,390 - 434,390 433,305 6,080,494 10,237,983 5,601,278 21,919,755 20,692,714 Expenditures International Missions
Missionary support and ministry Projects
Fellowship Services (notes 6, 18) Mission Canada
Distributions to other ministries
1,906,947 9,353,612 - 11,260,559 11,732,408 3,776,275 3,776,275 2,621,051 2,349,561 458,902 2,808,463 3,022,767 1,083,866 352,739 69,895 1,506,500 1,407,183 9,894 9,894 11,731 5,340,374 9,706,351 4,314,966 19,361,691 18,795,140 Excess of revenue over expenditures 740,120 531,632 1,286,312 2,558,064 1,897,574
Gain on investment in PFSG (note 19) 14,347 14,347 40,222
Excess of revenue over expenditures $ 754,467 $ 531,632 $1,286,312 $2,572,411 $1,937,796
THE PENTECOSTAL ASSEMBLIES OF CANADA Statement of Operating Funds Balances
Year ended December 31, 2013
Fund balance, beginning of year Interfund transfers (note 7)
Excess of revenue over expenditures
2013 2012
Shared Designated Designated
Operations Funding Internal External Total Total
(note 3) (note 3) (note 3) (note 3) (unrestricted) (internally restricted) (internally restricted) (externally restricted)
$ (249,225) $ 2,522,989 $ 137,446 $ 2,481,893 $ 4,893,103 $2,924,139 (473,302) 369,469 385,755 (228,349) 53,573 31,168
754,467 531,632 259,436 1,026,876 2,572,411 1,937,796 Fund balance, end of year $ 31,940 $ 3,424,090 $ 782,637 $ 3,280,420 $ 7,519,087 $ 4,893,103
Statement of Financial Position Year ended December 31, 2013
ASSETS Current assets
Cash and short-term deposits
Accounts receivable & accrued revenues Due from (to) other funds
Inventory and prepaid expenses Mission loans receivable (note 8)
2013 2012
Operating Trust Property
Funds Funds Fund Total Total
$ 2,274,919 510,124 141,533 113,015 $ $ $ 2,274,919 $ 1,195,613 181,512 691,636 603,936 (141,533) 113,015 99,429 7,440,326 7,440,326 5,582,583 3,039,591 7,480,305 10,519,896 7,481,561
Controlled entity (note 19) 1,369 Loans and mortgages held to fund annuities (note 9) -Loans and mortgages held (note 10) 1,450,361 Land, property and equipment (note 11)
-1,369 1,511,385 1,511,385 1,304,236 12,828,664 14,279,025 14,309,447 3,000,000 2,046,976 5,046,976 5,468,714 1,451,730 17,340,049 2,046,976 20,838,755 21,082,397 TOTAL ASSETS $ 4,491,321 $ 24,820,354 $ 2,046,976 $31,358,65t $ 28,563,958 LIABILITIES AND FUND BALANCES
Current liabilities
Accounts payable and accrued liabilities Due to related parties (note 18)
Loans payable - current portion (note 13)
$ 208,808 $ 62,295 $ $ 271,103 $ 368,820
45,289 45,289 100,092
2,268,413 2,268,413 4,440,069
254,097 2,330,708 - 2,584,805 4,908,981
Controlled entity (note 19) - 12,978
Gift annuities and gift agreements (note 9) 1,389,624 - 1,214,128 Revocable gift agreements (note 15) 4,000 - 4,000 Global Worker repatriation (note 16) 590,724 - 547,524 Loans payable (note 13) 2,140,596 - 1,277,155 Other loans (note 14) (3,281,863) 3,281,863 -
-(3,281,863) 7,406,807 - 4,124,944 3,055,785 TOTAL LIABILITIES (3,027,766) 9,737,515 - 6,709,749 7,964,766 1,389,624 4,000 590,724 2,140,596 FUND BALANCES Unrestricted
Internally restricted - shared funding - other funds Externally restricte~- designated funds
- trust funds (note 17) Invested in property and equipment
31,940 - - 31,940 (249,225) 3,424,090 - - 3,424,090 2,522,989 782,637 - - 782,637 137,446 3,280,420 - - 3,280,420 2,481,893 15,082,839 - 15,082,839 13,537,375 - 2,046,976 2,046,976 2,168,714
TOTAL FUND BALANCES 7,519,087 15,082,839 2,046,976 24,648,902 20,599,192 TOTAL LIABILITIES AND FUND BALANCES $ 4,491,321 $ 24,820,354 $ 2,046,976 $31,358,651 $ 28,563,958
THE PENTECOSTAL ASSEMBLIES OF CANADA Statement of Cash Flows
Year Ended December 31, 2013
Operating activities
Excess of revenue over expenditures Add (deduct) items not involving cash
Amortization
Write down of land value Investment in PFSG (note 19) Actuarial adjustment on annuities
2013 4,049,710 158,525 300,000 (14,347) (194,505) 2012 1,974,983 387,049 (40,222) (162,160) 4,299,383 2,159,650 Net change in non-cash working capital items
Accounts receivable
Inventory and prepaid expenses Due from (to) related parties
Accounts payable and accrued liabilities
(87,700) (82,901) (13,586) 19,204 (54,803) 97,464 (97,717) 260,929 (253,806) 294,696
Cash flows ~om operating activities 4,045,577 2,454,346
Financing activities Gift annuities issued Global Worker repatriation
New loans payable
Repayment of loans payable
370,001 290,000 43,200 31,271 2,760,765 2,856,436 (4,068,980) (3,151,690)
Cash flows from financing activities (895,014) 26,017
Investing activities
Issuance of mission loans receivable Collection of mission loans receivable Net change in annuity loans and mortgages Net change in loans and mortgages
Purchase of property and equipment
(2,489,620) (2,886,262) 631,877 516,301 (207,149) (175,050)
30,422 (1,321,542) (36,787) (65,705)
Cash flows from investing activities (2,071,257) (3,932,258)
Net change in cash and short-term deposits during the year 1,079,306 (1,451,895) Cash and short-term deposits, beginning of year 1,195,613 2,647,508
Cash and short-term deposits, end of year $ 2,274,919 $ 1,195,613 Cash and short-term deposits is comprised of:
Cash
Marketable securities
2,204,616 1,106,370 70,303 89,243
$ 2,274,919 $ 1,195,613
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
1. NATURE OF THE ORGANIZATION
The Pentecostal Assemblies of Canada (the "PAOC") was established by letters patent issued by the federal government on May 17, 1919 and is registered as a charitable organization with the Canada Revenue Agency, and as such is exempt from income taxes under the Income Tax Act (Canada).
The purpose and objectives of the organization are to: (a) conduct public worship;
(b) provide places of worship;
(c)
provide a basis of fellowship among Christians of like faith approving all scriptural teaching, method and conduct;(d) (e)
organize and conduct schools of religious instruction; carry on missional work for the spreading of the gospel; (f) carry on charitable and philanthropic work of every kind; (g) publish, sell and distribute Christian literature;
(h)
(i)
collect, solicit and accept funds or other subscriptions for the carrying on of the work of the organization, and for any other religious or benevolent purposes;
exercise any of the powers usually conferred on duly incorporated benevolent societies by either federal or provincial authorities; and
(J)
to exercise the right to own, hold in trust, use, sell, convey, mortgage, lease or otherwise dispose of such property, real or personal as may be needed for the execution of the work, and to invest and keep invested such funds as may be placed at its disposition for the furtherance of the objectives of the PAOC, and to dispose of the entire undertaking of the organization.2. RELATED PARTIES
The following are organizations related to the PAOC: Pentecostal Financial Services Group Inc.
Pentecostal Financial Services Group Inc. ("PFSG") is a wholly-owned subsidiary of the PAOC and was incorporated on March 24, 2005 under the Canada Business Corporations Act. The PAOC and PFSG also share common premises and administration services. PFSG is subject to credit and liquidity risks arising from its mortgages receivable and loans payable.
Emerqency Relief and Development Overseas
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 2. RELATED PARTIES (continued)
The Pension Fund (1969) of The Pentecostal Assemblies of Canada
The Pension Fund (1969) of The Pentecostal Assemblies of Canada (the "Pension Fund") is a multi-employer defined benefit pension plan, of which the PAOC is a member. Specified contributions made by eligible employees are matched by the employers.
PAOC Mission Link
PAOC Mission Link was established as a Canadian charity to manage and direct the donations toward international mission activities from the German churches of the PAOC. This charity continues to support many of PAOC’s current global workers, as well as on-going projects around the world and is related to the PAOC through the membership level of the organizations.
Villages of Hope: Africa Society
Villages of Hope: Africa Society is a Canadian charity which facilitates the establishment and administration of excellent care for children at risk, by partnering with various African based organizations. The organization has developed a set of standards for quality childcare, and holds each village accountable to those standards. The organization is related to the PAOC through the membership level of the organizations.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared by management in accordance with Canadian accounting standards for not for profit organizations. The more significant accounting policies are outlined below. 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 the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the year. Significant estimates requiring the use of management estimates and assumptions relate to useful life of assets. Actual results could differ from these estimates.
Fund accountinq
The organization’s accounts follow the principles of restricted fund accounting, under which resources for particular purposes are classified, for accounting and reporting, into funds corresponding to those purposes.
Operating Funds
Operating Funds include Operations, Shared Funding and Designated Funds. Operations consist of donations, other revenues, and related expenditures pertaining to the operations of the organization which are not included in other funds. Shared Funding includes donations designated for the approved budgets of missionaries. Designated Funds include donations designated for approved PAOC projects. Trust Funds
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property Fund
The Property Fund consists of assets, liabilities, donations, amortization and gains and losses related to the property and equipment of the PAOC.
Revenue recoqnition
Unrestricted donations, bequests and district tithes are recognized as revenue in the year received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Designated donations are recognized as revenue of the appropriate designated fund in the year received. Contributions of encroachable capital are recognized as revenue of the Trust Funds in the year received. Sales and service, credential fees and investment revenue are recorded as earned.
Inventory
Inventory is recorded at the lower of cost and net replacement cost, with cost being determined on a first-in, first-out basis.
Property and eauipment
Property and equipment are recorded at cost less amortization. Contributed property and equipment are recorded at fair value at the date of contribution. Amortization commences in the year subsequent to the year in which the asset is purchased or received and is calculated to depreciate the cost of the assets over their estimated useful lives on a straight-line basis as follows:
International office building 2.5% Furniture, fixtures and office equipment 10% Computer equipment 50% Allocation of administration expenditures
The PAOC allocates the following expenditures to the three main divisions of the organization based on the following:
i) Accounting - based on time spent by employees on each department
ii) Computers / information technology - based on number of users in each department iii) Premises - based on square footage used by departments
iv) Human resources support and reception - based on number of staff in each department and the number of calls received for each department
The details of the allocation are disclosed in note 20. Financial instruments
Measurement of financial instruments
The organization initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions.
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial instruments (continued)
The mission loans receivable, amounts due from (to) PFSG, ERDO and the Pension Fund, the promissory notes payable and the loans receivable from PFSG are measured at carrying value, as these are related party balances.
The mortgages held to fund annuities, loans and mortgages receivable and loans payable are measured at amortized cost using the effective interest method, with gains and losses recognized in the excess of
revenue over expenditures when the asset or liability is repaid or written off. The effective interest method allocates the interest income or expense over the term of the investment or debt, using the rate that exactly discounts the estimated future cash receipts or payments through the expected life of the financial instrument, to the net carrying amount of the financial asset or financial liability.
Gift annuities and gift agreements, revocable gift agreements, and the global worker repatriation balance in the Trust Funds are measured at fair value, with gains and losses recognized immediately in the excess of revenue over expenditures.
The global worker repatriation balance in the Trust Funds is recorded at carrying value as there are no set terms of repayment.
Impairment
Financial assets measured at amortized cost are tested for impairment when there are indicators of impairment. If an impairment has occurred, the carrying amount of financial assets measured at amortized cost is reduced to the greater of the discounted future cash flows expected or the proceeds that could be realized from the sale of the financial asset. The amount of the write-down is recognized in excess of revenue over expenditures. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been
recognized previously. The amount of the reversal is recognized in excess of revenue over expenditures. Foreign operations, assets and measurement uncertainty
The PAOC has consistently followed the policy of expensing all costs for overseas operations, and property and equipment through International Missions expenditures, unless these amounts represent advances which are to be repaid to the PAOC. This policy is based upon the practice that such assets, while generally redeployable under the direction of the International Missions Committee, are not always
accessible for redeployment due to foreign property titling regulations, and international fund transfer and foreign currency exchange limitations. While the PAOC may specifically assign title to national ministries overseas, it generally retains control of title while considering an orderly transfer of assets to stable national ministries overseas. Accordingly, these assets and operations are not included in the financial statements.
Contributed services
The value of contributed services is not reflected in these financial statements as the fair value of these services cannot be reasonably estimated.
Investment in Subsidiaries
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 4. OBJECTIVES, POLICIES AND PROCESSES FOR MANAGING CAPITAL
The PAOC’s capital is comprised of the net amounts invested in unrestricted funds, internally restricted funds - shared funding, externally restricted funds - designated funds, externally restricted funds - trust funds, and invested in property and equipment.
Unrestricted funds
The Board’s objective is to maintain an unrestricted fund balance sufficient to meet both the annual operational budget requirements, and the annual maintenance of property and equipment. The Assistant Superintendent for Fellowship Services (Treasurer) and the Director of Finance and Accounting prepare the annual budget (which includes the property requirements). The Board then approves this budget and the Assistant Superintendent for Fellowship Services monitors the results against the forecast and notifies the Board when changes to plans are required.
Internally restricted funds - shared fundinq
The objective of the internally restricted funds, or shared funding fund, is to hold these global worker balances from year to year in order to care for the ongoing personal and ministry requirements of them. Each global worker family is required to prepare an annual budget, which is approved by their Regional Director. These budgets are monitored throughout the year by the Assistant Superintendent for International Missions, and are adjusted accordingly as required.
Externally restricted funds - desiqnated funds
The externally restricted funds - designated are all the funds set aside by the Board to fulfill the donor wishes in providing for projects or ministries. Each project or ministry must be carrying out the charitable objectives of the PAOC. The Officers monitor these funds to ensure they are being distributed for their intended purposes. Where the funds are not required in the short term, the Treasurer invests their balances in accordance with Board policy, which allows that they be held in short term, low risk and highly liquid financial instruments.
Externally restricted funds - trust funds
The externally restricted funds - trusts are maintained in accordance with the terms of their contributors. The Board has established investment policies for these funds, and its main objective is to assure the maintenance of the contributed capital, in order to secure healthy investment revenues annually. The policy allows funds to be invested in money markets or church mortgages. The annual revenues from these investments are then distributed to various PAOC projects and programs, as per the original terms of their contributors.
Invested in property and equipment
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 OPERATING FUND REVENUE
Operating Funds revenue classified by the department to which it is directed consists of: 2013
International Mission Fellowship Total Missions Canada Services
2012 Total Donations $ 11,731,220 841,438 255,654 12,828,312 $ 12,697,325 Designa~d donations 4,063,782 17,285 633,811 4,714,878 3,685,161 Bequests 568,435 54,396 76,859 699,690 502,338 16,363,437 913,119 966,324 18,242,880 16,884,824 Distri~ tithes 438,007 974,300 1,412,307 1,330,673
Sales and services 121,450 492,129 760,761 1,374,340 1,634,638
Credential fees - 434,390 434,390 433,305
Investmentrevenue 174,841 34,121 246,876 455,838 409,274
$ 16,659,728 1,877,376 3,382,651 21,919,755 $ 20,692,714 b) Total donations consist of:
2013 2012 Operations $ 2,590,330 $ 2,429,388 Shared Funding 10,237,983 10,267,937 Designated Funds 4,714,878 3,685,161 Beques~ 699,689 502,338 $ 18,242,880 $ 16,884,824 6. FELLOWSHIP SERVICES
Fellowship services provides the administrative infrastructure to support the operations of the International Missions, Mission Canada, the International office, and administration of the shared, designated, trust and property funds.
During the year, fellowship services expenditures consisted of the following main categories:
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 7. INTERFUND TRANSFERS
The net transfer to (from) the Operating Funds resulted from the following transactions:
2013 2012
Trust Funds
Annuity Fund $ 90,359 $ 66,423
PAOC Endowment Fund 30,450
Property Fund
Purchase of property and equipment (36,787) (65,705)
53,572 $ 31,168 8. MISSIONS LOANS RECEIVABLE
Mission loans receivable consist of the following:
2013 2012
Interest bearing $ 7,350,326 $ 5,492,583
Non-interest bearing 90,000 90,000
$ 7,440,326 $ 5,582,583 The mission loans receivable are denominated in Canadian dollars, are due on demand, and include loans in or owing from:
2013 2012
Catalyst 21 Enterprises Inc. King of Kings Ministries Inc. Random Access Network
The Russian Church of Christians of Evangelical Pan Africa Christian University
Dares Salaam Pentecostal Church Property- Harare
House - Dominican Republic
The Pentecostal Bible College in Kenya Jubilee Christian Centre
Cornerstone Assembly of God, South Africa Harare Central Church Loan, Zimbabwe
House - Turkey Kitwe, Zambia
Tabernacle of David Assembly
Pentecostal Assemblies of God, Uganda ISTEK
Church of Christians of Evangelical Faith Murman Watoto Church
The Pentecostal Assemblies of Zambia Christian Life Ministries
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 9. GIFT ANNUITIES
Gift annuities are agreements whereby, in return for providing an initial payment to the PAOC, the donor is issued annual payments of agreed amounts, until written notice is received to terminate the annuity, or notice is received of the death of the annuitant. Upon termination, the net balance of the annuity is distributed under PAOC’s discretion, within the terms of the annuitant’s directions.
Mortgages of $1,511,385 (2012 - $1,304,236) are held to fund the gift annuities. The estimated obligation for gift annuity payments is $1,389,624 (2012 - $1,214,128).
New gift annuities issued during the year totaled $370,000 (2012 - $290,000). Gift annuities terminated during the year totaled $90,000 (2012 - $100,000).
10. LOANS AND MORTGAGES
Loans and mortgages totaling $ 3,116,595 (2012 - $4,158,707) are contractually owing from member churches of the PAOC through trustees who act as agents for both the borrower and the investor. The trustees are current or former officers of the PAOC. The remaining loans are owing from PFSG.
The loans and mortgages are due at various dates between January 14, 2014 and September 25, 2016 (2012 - March 31, 2013 and September 19, 2015) and earn interest at rates in the range of 4.7% and 6.5% (2012 - 2.9% and 6.5%). It is management’s intention to reinvest the funds as they come due.
11. LAND, PROPERTY AND EQUIPMENT
(a) Land, property and equipment consists of the following:
2013 2012
Accumulated
Cost Amortization Net Net
Trust Fund Land $ 3,300,000 $ $ 3,300,000 $ 3,300,000 Property Fund International Office Land 392,851 Building 2,266,301
Furniture, fixtures, office
and computer equipment 3,007,099
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 11. LAND, PROPERTY AND EQUIPMENT (continued)
(b) Other property
Other property consists of one donated mineral right and various overseas properties. As a result of the nature of these acquisitions and their indeterminable value, the PAOC has recorded these properties at a nominal amount of two dollars.
12. PROMISSORY NOTES PAYABLE
In order to finance the accumulated Operating Funds deficit, during 2005, the PAOC Operating Funds borrowed from the Trust Funds. The amount borrowed was secured by promissory notes, and the
International Office assets with a carrying value of $2,047,924 were pledged as collateral.
During the year, $246,011 (2012 - $235,411) of the balance was repaid and a further $0 (2012 - $0) was borrowed, bringing the balance owing to zero.
The promissory notes consist of the following:
2013 2012
Promissory note payable to the Endowment Fund (Wordcom),
due on demand, bearing interest at 2.9%, interest payable monthly $ - $ 149,660 Promissory note payable to the Endowment Fund (Fellowship Services),
due on demand, bearing interest at 2.9%, interest payable monthly 60,892 Promissory note payable to the Endowment Fund (Mission Canada),
due on demand, bearing interest at 2.9%, interest payable monthly 35,459
$ - $ 246,011
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 13. LOANS PAYABLE
Loans payable consist of unsecured amounts advanced by private individuals or private organizations to assist in financing specific projects and include the following:
2013 2012
Loan payable, bearing interest at4%, due May 1, 2015 $ 37,507 $ 57,564 Loan payable, bearing interest at 5%, due August 13, 2015 42,230 63,694 Loan payable, bearing interest at 4%, due August 10, 2015 78,562 83,660 Loan payable, bearing interest at 4%, due November 3, 2013 95,491 Loan payable, bearing interest at 2%, due September 27, 2014
Loan payable, bearing interest at 3.5%, due December 31, 2021
1,000,000 1,000,000
618,853 684,957
Loan payable, bearing interest at 4%, due September 1, 2017 500,000 500,000 Loan payable, bearing interest at 4%, due October 1, 2018 500,000
Loan payable, bearing interest at 4%, due June 30, 2023 200,000 Loan payable, bearing interest at 4%, due June 30, 2023 50,000
Loan payable, bearing interest at 2%, due October 14, 2013 1,850,000 Loan payable, bearing interest at 2%, due December 19, 2014 1,000,000 1,000,000 Loan payable, non-interest bearing, due on demand 381,857 381,858 4,409,009 5,717,224
Less: current portion 2,268,413 4,440,069
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 13. LOANS PAYABLE (continued)
Interest in the amount of $240,650 (2012 - $231,726) related to the above loans payable has been recorded in interest expense of the Trust Funds.
Future minimum principal repayments over the next five years are as follows:
2014 $ 2,268,413 2015 231,651 2016 202,916 2017 710,801 2018 191,469 The~affer 803,759 $ 4,409,009 14. OTHER LOANS
Other loans totaling $3,281,863 were borrowed by the trust funds from the operating fund. The loan is bearing interest of 2% and is due June 23, 2015.
15. REVOCABLE GIFT AGREEMENTS
Revocable gift agreements stipulate that the donor is entitled to withdraw a portion of the capital and accrued interest until their death, at which time the remaining principal and accrued interest is donated to the PAOC. The organization reflects the donation and accrued interest as a long-term liability until the death of the donor, at which time the funds are recognized as revenue.
16. GLOBAL WORKER REPATRIATION
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 17. TRUST FUNDS - CHANGES IN FUND BALANCES
Name
John & Lydia Rebman Trust Fund PAOC Endowment Fund
McKay Trust Fund Overseas Loan Fund
The Health Care Endowment Fund Gummer Trust Fund
Santrec Trust Fund Harrison Trust Fund Church Planting Trust Fund
Hutchinson Trust Fund Putrus Trust Fund Kirk Trust Fund Non-Quon Fund Memorial Fund
Dean Trust Fund Annuity Fund
Buchanan Trust Literature Fund Revocable Trust Fund Audrey Shields Trust Fund
January 1,2013
Opening Transfers December31,2013
Balance Increase Decreases In(Out) Ending Balance
4,720,259 115,185 155,061 4,680,383 3,532,997 450,048 349,090 3,633,955 2,209,801 110,477 54,067 2,266,211 562,858 690,334 191,513 1,061,679 288,585 612,910 20,093 881,402 639,453 31,676 13,230 657,899 469,336 15,460 16,413 468,383 324,469 949 791 324,627 316,119 316,119 280,090 617 691 280,016 121,554 (8,931) 450 112,173 101,013 4,922 4,745 101,190 100,000 35 100,035 70,338 (71) 347 69,920 41,794 (1,593) 206 - 39,995 24,520 264,969 163,259 (90,359) 35,871 25,815 1,274 - 27,089 14,862 723 15,585 6,392 518 6,910 3,239 158 3,397 $ 13,537,375 $ 2,644,479 $ 669,956 $ (90,359) $ 15,082,839
18.
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
DUE FROM (TO) RELATED PARTIES AND RELATED PARTY TRANSACTIONS
2013 2012
Due from PFSG Due (to) ERDO
Due (to) the Pension Fund Due (to) VOH
Due (to) from Mission Link
$ 86,145 $ 141,514 (1,034) (49,451) (70,658) (120,867) (24,905) (97,490) (34,837) 26,202 $ (45,289) $ (100,092)
The balances due from (to) related parties are unsecured, non-interest bearing and have no set terms of repayment.
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
19. FINANCIAL INFORMATION OF RELATED PARTIES
The operations of the Pension Fund have been presented and reported upon separately from the PAOC. The operations of PFSG have not been consolidated in the accounts of the PAOC.
PAOC is the sole shareholder and therefore controls PFSG. PFSG has not been consolidated in PAOC’s financial statements. The investment has been accounted for using the equity method. There was a gain on investment in PSFG of $14,347.
2013 2012
(Loss) Gain on investment in PFSG
Net income $ 70,347 $ 75,058
Dividends (84,000) (52,200)
Refundable tax 28,000 17,364
$ 14,347 $ 40,222 A financial summary at December 31, 2013 is as follows:
2013 2012
Financial Position
Assets $ 60,347,638 $ 58,276,184
Liabilities $ 60,346,268 $ 58,289,161
Share capital 1 1
Retained earnings (deficit) 1,369 (12,978)
Total liabilities and deficit $ 60,347,638 $ 58,276,184 Results of Operations
Revenue $ 2,971,839 $ 2,799,087
Expenses 2,901,492 2,724,029
Net income $ 70,347 $ 75,058
Cash Flows
Cash used in operations $ 79,931 $ (83,044)
Cash provided by financing and investing activities (5,921) 8,343
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 20. ALLOCATION OF ADMINISTRATION EXPENDITURES
Certain of the administration expenses of Fellowship Services have been allocated among International Missions, Fellowship Services and Mission Canada divisions as follows:
2013
International Fellowship Mission
Missions Services Canada Total
the 2012 Total Accounting Computers/information technology Premises
Human resources support and reception
$ 244,997 $ 144,563 $ 59,385 $ 448,945 82,421 52,450 42,334 177,205 20,190 23,608 13,314 57,113 29,679 28,635 18,493 76,807 $ 489,961 201,928 70,856 79,994 During 2013, the allocation was based on the actual usage of each department.
21. GIFTS OF LIFE INSURANCE POLICIES AS CHARITABLE DONATIONS
The PAOC is the owner and partial beneficiary of life provisions of the Income Tax Act (Canada).
Number of policies in good standing Face value of policies
Cash surrender value
insurance policies gifted in accordance with
2013
25 $ 2,062,300 $ 173,202
22. COMMITMENTS
The PAOC is committed to 2016 under operating leases for office equipment. payments required over the next three years are as follows:
2014 $ 45,O8O
2015 45,080
2016 45,080
Future minimum annual
Each year an actuarial valuation is completed for the Pension Fund (1969) of the Pentecostal Assemblies of Canada. This is a multi-employer defined benefit pension plan, of which PAOC is a member. It was determined that the plan has a contribution shortfall that must be allocated between participating employers/organizations in an equitable manner until the shortfall is eliminated. It is unknown at this time PAOC’s allocation of the contribution shortfall.
23. LINE OF CREDIT
THE PENTECOSTAL ASSEMBLIES OF CANADA NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2013 24. FINANCIAL INSTRUMENTS
It is management’s opinion that the PAOC is not exposed to significant currency risks arising from its financial instruments.
PAOC is exposed to liquidity and credit risk with respect to its loans and mortgages as well as the loans payable.
The organization’s investments in short-term deposits, the mission loans receivable, mortgages held to fund annuities, and loans and mortgages are subject to market risks as the value of these investments will change with market fluctuations.
