Page 62 - VanArtGallAR

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(vii) Pension plan:
The Association maintains a defined contribution plan for its
employees. Pension plan costs for the employees of the Associa-
tion are funded annually and are charged to operating expenses.
These costs totaled $154,383 for the year ended June 30, 2011
(2010 – $148,322).
(viii) Collection:
The costs of additions to the collection are charged as an expense
in the Acquisitions Fund in the year of acquisition.
(ix) Donated works of art, materials and services:
The Association receives donated works of art, materials and
services, including services from governance members, the value
of which is not reflected in these financial statements.
(x) Use of estimates:
The preparation of financial statements requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during
the year. Significant areas requiring the use of management
estimates relate to the determination of useful lives of capital
assets for purposes of amortization, valuation of inventories,
allowance for doubtful accounts, including pledges of donations,
and provisions, if any, for contingencies. Actual results may differ
from these estimates.
(c) Financial instruments:
Financial instruments are accounted for in accordance with the
Canadian Institute of Chartered Accountants (“CICA”) Handbook
Section 3855,
Financial Instruments—Recognition and Measure-
, and as permitted for not-for-profit organizations, Section
Financial Instruments—Disclosure and Presentation
. These
Sections require all financial assets and liabilities to be classified
into one of the following five categories: held for trading, held-
to-maturity, loans and receivables, available-for-sale financial
assets or other financial liabilities. All financial instruments
are included on the statement of financial position and initially
measured at fair market value. Subsequent measurement and
recognition of changes in fair value of financial instruments
depend on their initial classification. Held for trading financial
investments are measured at fair value and all gains and losses
are included in the statement of operations in the period in which
they arise. Available-for-sale financial instruments are measured
at fair value with revaluation gains and losses recognized as
changes in net assets until the financial asset is disposed of
or becomes impaired. Loans and receivables, held-to-maturity
financial investment and other financial liabilities are measured
at amortized cost using the effective interest rate method.
The Association classifies its cash and cash equivalents as held
for trading. Grants, pledges, interest and accounts receivable are
classified as loans and receivables and are measured at amor-
tized cost. Bank indebtedness, outstanding cheques, accounts
payable and accrued liabilities, long-term liability, and obligations
under capital lease are classified as other financial liabilities
and are measured at amortized cost.
(d) Future accounting changes:
The Association is classified as a not-for-profit organization. In
December 2010, the Accounting Standards Board (“AcSB”) of the
CICA released the accounting standards impacting the future
financial reporting framework for not-for-profit organizations.
These standards are effective for years beginning on or after
January 1, 2012. Organizations have an option to early adopt
these new standards.
Under the new accounting standards issued by the AcSB, not-
for-profit organizations will apply the Accounting Standards for
Not-for-Profit Organizations contained in Part III of the CICA
Handbook—Accounting. For topics not specifically addressed
in Part III, not-for-profit organizations will use Part II: Account-
ing Standards for Private Enterprises of the CICA Handbook—
Not-for-Profit Organizations also have the option of adopting
International Financial Reporting Standards. The Association
has elected to adopt the Accounting Standards for Not-for-Profit
Organizations and is in the process of reviewing the potential
impact of the new standards.
Prior to 2011, the Association recognized certain amounts of
grant revenue on a cash receipts basis. In addition, certain
general operating grant revenue amounts, awarded during the
calendar year, were recorded on the same basis that the related
expenses were incurred, which resulted in an accrual of revenue
at year end. In the current year, the Association adopted the
policy of recognizing all grant revenues awarded for use towards
general operations on a straight-line basis over the period for
which the grants are provided. This policy application has been
effected by management on a retroactive basis with the impact
of decreasing opening net assets at July 1, 2009 and 2010 by
$541,875 and $786,720, respectively, accounts receivable at
June 30, 2010 by $786,720, and grant revenues for the year ended
June 30, 2010 by $244,845. The prior year comparative figures
have accordingly been restated.
Endowment funds, administered by the Vancouver Foundation and
recorded in its financial statements, are permanently restricted
and consequently not included as assets of the Association in
Year ended June 30, 2011