C1ons1olidated Finanicial Statements
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C1ONS 1OLIDATED FINANCIALI STATEMENTS For year ended Mlarch 31, 2017 PUBLISHED IN ACCORDANCE WITH THE FINANCIAL INFORMATION ACT (FORMATTED FOR UBC WEBSITE) Vancouver, B.C. 1Canada Consolidated Financial Statements Year ended March 31, 2017 Published in Accordance with the Financial Information Act Table of Contents Statement of Management Responsibility ................................................................................................. 1 Auditors’ Report .................................................................................................................................. 2 - 3 Consolidated Financial Statements (audited): - Consolidated Statement of Financial Position ................................................................................... 4 - Consolidated Statement of Operations and Accumulated Surplus ................................................... 5 - Consolidated Statement of Changes in Net Debt .............................................................................. 6 - Consolidated Statement of Cash Flows ............................................................................................ 7 - Consolidated Statement of Remeasurement Gains and Losses ...................................................... 8 Notes to the Consolidated Financial Statements ............................................................................. 9 - 36 Schedule of Debt ..................................................................................................................................... 37 Schedule of Guarantee and Indemnity Agreements ............................................................................... 38 Schedule of Remuneration and Expenses in Respect of the Members of the Board of Governors ....... 39 Schedule of Remuneration and Expenses Paid to Employees or On Behalf of Employees .......... 40 - 145 Schedule of Payments for Goods and Services .......................................................................... 146 - 189 Schedule of Grants Paid to Other Agencies ............................................................................... 190 - 193 Consolidated Financial Statement, Year ended March 31, 2017 Statement of Mana1ementReSP.Onsiblll!Y The consolidated financial statements of the University of British Columbia (the University) have been prepared by management in conformity with Canadian public sector accounting standards and Treasury Board direction outlined in note 2(a). The financial statements present the financial position of the University as at March 31, 2017, and the results of its operations, remeasurement gains and losses, and the changes in net debt and changes in its cash flowfor the year ended March 31, 2017. In fulfillingits responsibilities and recognizing the limits inherent in all systems, management. has developed and maintains a system of internal control designed to provide reasonable assurance that University assets are safeguarded from loss and that the accounting records are a reliabte basis for the preparation of financial statements. The Board of Governors is responsible for reviewing and approving the financia, statements, and overseeing management's performanceof its financial reporting responsibilities. The Board of Governors carries out its responsibility forreview of the financial statements principally through its Audit Committee. No members of the Audit Committee are officers or employees of the University. The Audit Committee meets with management, the externalauditors and the internal auditors to discuss the results of audit examinations and financial reporting matters. The external and internal auditors have full access to the Audit Committee, with and without the presence of management. The financial statements for the year ended March 31, 2017 have been reported on by KPMG. The Independent Auditor's Report outlines the scope of the audit and provides the audit opinion on the consolidated financial statements. Santa Ono President and Vice-Chancellor Vice-President Finance & Operations May 26, 2017 .. THE UNIVERSITY OF BRITISH COLUMBIA I Page 1 KPMG LLP PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1 K3 Canada Telephone (604) 691-3000 Fax (604) 691-3031 INDEPENDENT AUDITORS' REPORT To the Board of Governors of the University of British Columbia. and To the Minister of Advanced Education, Province of British Columbia We have audited the accompanying consolidated financial statements of the University of British Columbia, which comprise the consolidated statement of financial position as at March 31, 2017, the consolidated statements of operations and accumulated surplus, remeasurement gains and losses, changes in net debt and cash flows, for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibilityfor the Consolidated Financial Statements Management is responsible for the preparation of these consolidated 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation of the consolidated 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 consolidated financial statements. KPMG LLP ts a Canad,an 1,m,100habthty pMnersh,p ano a member I.rm ol the KPMG ne1Wor!<. of ,ndependen1 Member firms affiliated w1lh KPMG 1ntemat.1ona1 Coopera11ve I KPM..., l"lte �r -1 , a Sw,ss en111y 1ogoKPMG Canada provides S6Nle&S to KPMG LLP Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2017 (all tabular amounts are in thousands of dollars) 5 Investments Investments include operating, endowment and sinking fund investments. Operating investments consist of research, capital, and other funds received and held in advance for future expenditures. Endowment investments consist of donattons held in perpetuity and land lease revenues received by the University to benefit current and future generatfons. Sinking fund investments are managed by the provincial government and will be applied against repayment of provincial debentures on maturity (Note 13). (a) Analysis of Investments March 31 March 31 2017 2016 Government and corporate bonds Maturity Less than 1 year $ 51,045 $ 30,078 1 - 5 years 461,650 178,287 Greater than 5 years 4,987 107,260 Various - pooled 199,272 276,151 716,954 591,776 Short-term notes and treasurybills 15,803 10,798 Canadian equities 224,431 189,348 Canadian pooled funds 297,897 263,687 United States equities and pooled funds 148,933 136,975 Other international pooled funds 618,890 558,998 Other 49,743 50,219 $ 2,072,651 $ ------1,801,801 These investments are presented in the consolidated financial statements as: March 31 March 31 2017 2016 Operating investments $ 511,708 $ 319,376 Endowment (expendable balance) 622,219 576,199 Endowment (original contribution) 916,053 885,806 Sinking fund investments (Note 13) 22,671 20,420 $ 2,072,651 $ 1,801,801 Investments maturing between 90 days and one year inctude promissory notes of $33.3 million (March 31, 2016 - $30.1 million) with a related party, UBC Properties Investments Ltd (Note 6(b)). The promissory notes are unsecured with floating interest rates set at the greater of either prime rate less 1.0% or a floor rate of 2.5% per annum. Other investments include cash and short-term investments rerated to endowments and real estate investments and promissory notes issued by unrelated parties. Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 THE UNIVERSITY OF BRITISH COLUMBIA SCHEDULE OF DEBT AS AT MARCH 31, 2017 Maturity Date Interest Rate Debt Balance Sinking Fund Long Term Debt Unsecured Debentures December 1, 2031 6.650% $ 127,732,877 $ - July 26, 2035 4.817% 126,055,781 - $ 253,788,658 $ - Canada Mortgage & Housing Corporation July 1, 2018 6.125% $ 401,807 $ - July 1, 2019 6.375% 189,911 - July 1, 2019 6.250% 382,659 - July 1, 2022