CONSOLIDATED FINANCIAL STATEMENTS For year ended March 31, 2019 PUBLISHED IN ACCORDANCE WITH THE FINANCIAL INFORMATION ACT Vancouver, B.C. Canada CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2019 Published in Accordance with the Financial Information Act Table of Contents Statement of Management Responsibility ………………………………………………………………... 1 Auditors’ Report ……………………………………………………………………………………………… 2-4 Consolidated Financial Statements (audited): 5 Consolidated Statement of Financial Position ………………………………………………………….. 5 Consolidated Statement of Operations and Accumulated Surplus …………………………………… 6 Consolidated Statement of Changes in Net Debt …......................................................................... 7 Consolidated Statement of Cash Flows ……………………………………………………………….... 8 Consolidated Statement of Remeasurement Gains and Losses ……………………………………... 9 Notes to the Consolidated Financial Statements ………………………………………………………… 10-36 Statement of Financial Information (Unaudited) …………………………………………………………. 37 Schedule of Indemnity and Guarantee Agreements …………………………………………………… 37 Schedule of Remuneration and Expenses in Respect of the Members of the Board of Governors.. 38 Schedule of Remuneration and Expenses Paid to Employees or On Behalf of Employees ……..... 39-102 Schedule of Payments for Goods and Services ………………………………………………………... 103-129 Schedule of Grants Paid to Other Agencies ……………………………………………………………. 130-131 Page | 1 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 the University of British Columbia, and To the Minister of the Ministry of Advanced Education, Skills & Training, Province of British Columbia Opinion We have audited the consolidated financial statements of the University of British Columbia (the “Entity”), 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 the consolidated statement of remeasurement gains and losses 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 Entity 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 Entity 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. Page | 2 KPMG Canada provides services to KPMG LLP. University of British Columbia Page 2 Emphasis of Matter - Financial Reporting Framework We draw attention to Note 2 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 Those Charged with Governance for the Financial Statements 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 Entity’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 Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity’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. Page | 3 University 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 Entity'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 Entity'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 Entity 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 13, 2019 Page | 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT MARCH 31 (in thousands of dollars) March 31 March 31 2019 2018 Financial Assets Cash and cash equivalents (Note 3) $ 149,596 $ 231,171 Accounts receivable 222,992 166,616 Inventories for resale 6,170 6,073 Investments (Note 4) Operating 666,657 525,191 Endowment (expendable balance) 877,469 779,374 Investments in government business enterprises (Note 5) 108,902 26,362 2,031,786 1,734,787 Liabilities Accounts payable and accrued liabilities (Note 7) 312,991 297,283 Employee future benefits (Note 8b) 9,865 8,987 Deferred contributions (Note 9) 1,170,797 1,115,806 Deferred capital contributions (Note 10) 1,555,969 1,510,738 Deferred land lease revenue (Note 11) 957,180 758,277 Debt (Note 12) 350,286 355,235 4,357,088 4,046,326 Net debt (2,325,302) (2,311,539) Non-Financial Assets Tangible capital assets (Note 13) 3,529,400 3,375,734 Investments Endowment (original contribution) (Note 4) 970,536 942,455 Inventories held for use 2,119 2,015 Prepaid expenses 25,101 22,230 4,527,156 4,342,434 Accumulated surplus $ 2,201,854 $ 2,030,895 Accumulated surplus is comprised of: Accumulated surplus $ 2,149,598 $ 1,990,999 Accumulated remeasurement gains 52,256 39,896 $ 2,201,854 $ 2,030,895 Contractual obligations and contingent liabilities