PWC – Independent auditor’s report
To the Board of Directors of Ontario Public Service Employees Union
Our opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Ontario Public Service Employees Union (the Organization) as at December 31, 2021 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.
What we have audited
The Organization’s financial statements comprise:
- the statement of financial position as at December 31, 2021;
- the statement of revenues and expenditures and fund balances for the year then ended;
- the statement of cash flows for the year then ended; and
- the notes to the financial statements, which include significant accounting policies and other explanatory
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 Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Organization in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.
Responsibilities of management and those charged with governance for the financial statements
Management is responsible for the preparation and fair presentation of the 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.
In preparing the financial statements, management is responsible for assessing the Organization’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 Organization or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Organization’s financial reporting process.
Auditor’s 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 auditor’s 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 these 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 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.
- 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 Organization’s internal
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
- 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 Organization’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Organization to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We 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.
PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants Vaughan, Ontario
March 17, 2022
Statement of Financial Position
As at December 31, 2021
| 2021 | 2020 | |||||
|
General Fund |
Strike Fund |
Education Fund |
Defence Fund |
Total |
Total |
|
| $ | $ | $ | $ | $ | $ | |
| Assets | ||||||
| Current assets
Cash |
14,969,649 |
5,157,300 |
3,347,046 |
23,473,995 |
11,884,167 |
|
| Receivables
Dues |
7,261,357 |
7,261,357 | 7,223,455 | |||
| Other | 1,339,746 | 223 | 1,339,969 | 2,607,042 | ||
| Prepaid expenses and other assets | 1,223,748 | 16,261 | 1,240,009 | 1,301,263 | ||
| 24,794,500 | 5,157,300 | 3,363,530 | 33,315,330 | 23,015,927 | ||
| Investments | 4,218,363 | 38,404,789 | 42,623,152 | 37,720,951 | ||
| Capital assets (note 3) | 3,929,057 | 54,778,487 | 58,707,544 | 45,574,340 | ||
| 32,941,920 | 98,340,576 | 3,363,530 | 134,646,026 | 106,311,218 | ||
| Liabilities and Fund Balances | ||||||
| Current liabilities
Bank indebtedness (note 4) |
3,225,062 |
3,225,062 |
3,290,384 |
|||
| Accounts payable | 10,817,321 | 7,685 | 56,027 | 10,881,033 | 10,521,895 | |
| Accrued liabilities
Obligations under capital leases (note 6) |
29,506,213
193,159 |
29,506,213
193,159 |
26,006,856
152,218 |
|||
|
43,741,755 |
7,685 |
56,027 |
43,805,467 |
39,971,353 |
||
| Inter-fund balances | (17,741,738) | 17,465,109 | 251,516 | 25,113 | ||
| Obligations under capital leases | ||||||
| (note 6) | 216,156 | 216,156 | 421,601 | |||
| Post-employment benefits (note 9) | 56,022,000 | 56,022,000 | 50,631,000 | |||
|
82,238,173 |
17,472,794 |
307,543 |
25,113 |
100,043,623 |
91,023,954 |
|
| Fund surplus (deficit) | (49,296,253) | 80,867,782 | 3,055,987 | (25,113) | 34,602,403 | 15,287,264 |
| 32,941,920 | 98,340,576 | 3,363,530 | 134,646,026 | 106,311,218 | ||
| Commitments and contingencies | ||||||
(notes 8 and 11)
Statement of Revenue and Expenditures and Fund Balances
For the year ended December 31, 2021
| 2021 | 2020 | |||||
|
General Fund |
Strike Fund |
Education Fund |
Defence Fund |
Total |
Total |
|
| $ | $ | $ | $ | $ | $ | |
| Revenue
Membership dues |
112,846,703 |
10,821,732 |
1,459,849 |
200,000 |
125,328,284 |
119,418,967 |
| Investment income (note 7) | 175,592 | 1,262,303 | 1,437,895 | 1,196,088 | ||
| Other income | 1,467,487 | 1,467,487 | 1,591,666 | |||
| 114,489,782 | 12,084,035 | 1,459,849 | 200,000 | 128,233,666 | 122,206,721 | |
| Expenditures
Members’ activities (schedule 1) |
36,254,482 |
225,113 |
36,479,595 |
35,611,479 |
||
| Executive board activities
(schedule 2) |
644,726 |
644,726 |
672,531 |
|||
| Departmental costs (schedule 3) | 56,307,991 | 56,307,991 | 53,177,245 | |||
| Strike | 150,800 | 150,800 | 304,296 | |||
| Amortization of capital assets | 2,696,690 | 3,057,360 | 5,754,050 | 3,902,995 | ||
| Education | 259,235 | 259,235 | 532,222 | |||
| Investment management fees | 48,570 | 48,570 | 9,121 | |||
| 95,903,889 | 3,256,730 | 259,235 | 225,113 | 99,644,967 | 94,209,889 | |
| Net operating revenue | 18,585,893 | 8,827,305 | 1,200,614 | (25,113) | 28,588,699 | 27,996,832 |
| Post-employment benefits | ||||||
| (note 9) | (7,716,479} | (7,716,479} | (6,850,000} | |||
| Excess (deficiency) of | ||||||
| revenue over expenditures before the undernoted |
10,869,414 |
8,827,305 |
1,200,614 |
(25,113) |
20,872,220 |
21,146,832 |
| Contribution from merger
(note 12) |
7,908,746 |
|||||
| Change in fair value of investments |
524,572 |
2,786,347 |
3,310,919 |
521,170 |
||
| Income (loss) for the year |
11,393,986 |
11,613,652 |
1,200,614 |
(25,113) |
24,183,139 |
29,576,748 |
| Fund surplus (deficit) –
Beginning of year |
(55,828,704) |
69,260,595 |
1,855,373 |
15,287,264 |
(19,667,484) |
|
| Net actuarial gain (loss) – post-employment benefits (note 9) | (4,868,000) | (4,868,000) | 5,378,000 | |||
| Inter-fund transfers (notes 7 and 12) | 6,456 | (6,465} | ||||
| Fund surplus (deficit) – End of year | {49,296,262l} | 80,867,782 | 3,055,987 | {25,113l} | 34,602,403 | 15,287,264 |
The accompanying notes are an integral part of these financial statements.
Statement of Cash Flows
For the year ended December 31, 2021
|
Cash provided by (used in) |
2021
$ |
2020
$ |
| Operating activities | ||
| Income for the year Items not affecting cash | 24,183,139 | 29,576,748 |
| Amortization of capital assets | 5,754,050 | 3,902,995 |
| Contribution from merger (note 12) | – | (7,649,575) |
| Post-employment benefits | 523,000 | (99,000) |
| Change in fair value of investments | (3,310,919) | (521,170) |
| Reinvested investment income | (1,591,282) | (1,131,809) |
| 25,557,988 | 24,078,189 | |
| Changes in non-cash working capital (note 10) | 5,148,920 | (2,846,804) |
| 30,706,908 | 21,231,385 | |
| Investing activities | ||
| Proceeds on disposal of investments | – | 1,446,025 |
| Purchase of capital assets | (18,887,254) | (14,522,610) |
| (18,887,254) | (13,076,585) | |
| Financing activities | ||
| Change in bank indebtedness | (65,322) | 133,722 |
| Repayment of capital lease obligations | (164,504) | (135,020) |
| (229,826) | (1,298) | |
| Change in cash during the year | 11,589,828 | 8,153,502 |
| Cash – Beginning of year | 11,884,167 | 3,730,665 |
| Cash – End of year | 23,473,995 | 11,884,167 |
Notes to financial statements
1 Summary of significant accounting policies
Purpose of organization
Ontario Public Service Employees Union (OPSEU) is incorporated without share capital under the provisions of Part III of the Corporations Act of the Province of Ontario (the Act). The Act requires that OPSEU be carried on without the purpose of gain for its members and that any profits or other accretions to OPSEU be used in promoting its objectives.
OPSEU is exempt from income tax under the provisions of paragraph 149(1)0c) of the Income Tax Act (Canada).
Basis of accounting
These financial statements are prepared in accordance with Canadian accounting standards for not-for-profit organizations (ASNPO) in Part III of the Chartered Professional Accountants of Canada Handbook. The financial statements include the following significant accounting policies.
Fund accounting
These financial statements include the following funds:
1) Strike Fund
The Strike Fund is maintained in accordance with Article 23 of the Constitution:
- OPSEU shall maintain a Strike Fund, whose assets shall be used only for the following purposes:
- for strike pay and expenses related to strikes, lockouts and other work stoppage situations involving OPSEU members; and
- on a two-thirds majority roll-call of the Executive Board, to make interest free loans to other striking unions where the Board deems such loans to be in the interest of OPSEU
- Notwithstanding Article 1, theassets of the Strike Fund may be encumbered by one or more security interests in order to secure any form of indebtedness of OPSEU, subject to any policies that may be established from time to time by the Executive Board regarding the manner of giving of security over the assets of the Strike Fund. Any such approval encumbrance shall require approval by two-thirds of the Executive Board.
Notwithstanding Article 23.1, up to 10 million dollars of the assets of the Strike Fund may be encumbered. There are no assets encumbered as at December 31, 2021 (2020 – $nil).
(1)
2) Education Fund
The resources of this fund are used to support OPSEU’s Education Program.
3) Defence Fund
The resources in this fund are used to support situations that involve fundamental challenges to OPSEU’s principles, standards and practices.
4) General Fund
The ongoing operations of OPSEU are funded through the General Fund. This includes all staffing and related costs, the operating costs for OPSEU’s buildings and equipment, the costs for negotiations, legal and other fees related to grievance handling, organizing, committee meetings, campaigns and other member activities.
Rebates to Locals
Rebate funds are used by the Locals to run their operations in accordance with OPSEU’s constitution and local by-laws. The per capita membership dues rebates to Locals are recorded as an expenditure in the year in which they are paid.
Capital assets
Capital assets are carried at cost less accumulated amortization. Amortization charges are based on the estimated useful lives of the assets and are calculated at the following annual rates and methods:
Building and improvements – 4% declining balance
Furniture and fixtures – 3 years straight line
Computer hardware and soft are Equipment – 3 years straight line
Vehicles – 3 years straight line
Leasehold improvements – over-term of lease
Capital lease assets – over-term of lease
Major capital expenditures intended to enhance or prolong the life of a building are treated as assets. Annual operating costs are recorded as expenses of the General Fund.
OPSEU reviews the carrying amounts of its long-lived assets regularly. If the long-lived assets no longer have any long-term service potential to OPSEU, the excess of the net carrying amount over any residual value is recognized as an expense in the statement of revenue and expenditures and fund balances.
Post-employment benefits
OPSEU records its obligations under the pension plan and other post-retirement benefit plan as being its total liabilities and related costs less the plan assets. OPSEU has the following policies:
- OPSEU has elected to use the actuarial valuation for funding purposes (funding valuations) for the pension and other post-retirement benefit
- The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management’s best estimate of expected plan investment performance for funded plans, salary escalation, retirement ages of employees and expected health-care
- Plan assets are measured at fair When the fair value of plan assets exceeds the defined benefit obligation, the plan surplus will be recognized as a defined benefit asset on the statement of financial position only to the extent it is expected to be realized. A valuation allowance for any excess of the plan surplus over the expected future benefit will be recorded in the statement of revenue and expenditures and fund balances.
- Actuarial gains and losses arise when the actual return on plan assets differs from the expected return on the plan assets for a period, or when the defined benefit obligations change during the year. The actuarial gains and losses are recorded directly in the General Fund. A curtailment is an event that significantly reduces the expected years of future service of present employees or eliminates the accrual of defined benefits for future services of a significant number of active participants. The components of the gain or loss are recognized in the statement of revenue and expenditures and fund balances in the year in which they occur.
Financial instruments
Financial assets and financial liabilities are initially measured at fair value. OPSEU measures all its financial assets and financial liabilities at amortized cost, except for long-term investments, which are measured at fair value. Changes in the fair value are recognized in the statement of revenue and expenditures and fund balances.
Financial assets measured at amortized cost include cash and amounts receivable. Long-term investments are measured at fair value including fixed income investments.
Financial liabilities measured at amortized cost include bank indebtedness, accounts payable and accrued liabilities.
Revenue recognition and dues receivable
OPSEU uses the restricted fund method of accounting for its contributions.
Membership dues are recognized as revenue of the General Fund, Education Fund and Defence Fund in the year received or receivable in accordance with the approved budget. Membership dues are recognized as revenue of the Strike Fund in the year received or receivable in accordance with Article 23 of the Constitution. Dues receivable are recognized as an asset when the amount to be received can be reasonably estimated and collection is reasonably assured.
Investment income is recognized as revenue of the General Fund and Strike Fund when earned, based on the investments held in each fund.
Leased assets
Leases entered into that transfer substantially all the benefits and risks associated with ownership are recorded as the acquisition of a capital asset and the incurrence of an obligation. The asset is amortized in a manner consistent with assets owned by OPSEU, and the obligation, including interest thereon, is liquidated over the term of the lease. All other leases are accounted for as operating leases, and the rental costs are expensed as incurred.
Use of estimates
The preparation of these financial statements in accordance with ASNPO requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenue and expenditures during the reporting period. Actual results could differ from those estimates. Accounts requiring significant estimates include receivables, investments, useful lives and impairment of capital assets and post-employment benefits.
2 Funds in the hands of the Locals
The assets of Locals are available for the general use of OPSEU only in the event a Local should cease to exist because the members cease to be members of OPSEU. Funds in the hands of Locals have not been included in these financial statements because of the unavailability of the funds except in this extreme situation. Based on the most recent trustees’ reports received, these funds have been conservatively estimated to be in excess of $42,000,000 (2020 – $33,000,000).
3 Capital assets
The capital assets of the General Fund are as follows:
| 2021 | 2020 | |||
| Cost $ |
Cost $ |
Accumulated amortization $ |
2021 | 2020 |
| Building and improvements | 1,328,635 | 944,938 | 383,697 | 454,085 |
| Assets acquired under capital l
|