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• FOR INFORMATION

S.00-70

SIMON FRASER UNIVERSITY

MEMORANDUM

Director, University Secretariat

DATE: ?

August 14, 2000

SUBJECT:

Annual Financial Statements

Section 32 of the University Act states: "The board shall make an annual report of

its transactions to the Minister, in which shall be set out a balance sheet and a

statement of revenue and expenditure for the year ending on the preceding March

. ?

31, and other particulars the Minister may require. A copy of the annual report shall

be transmitted promptly to the senate."

A copy of the report is attached.

NOTE:

IF YOU DO NOT WISH TO KEEP THE ANNUAL FINANCIAL STATEMENT,?

PLEASE RETURN IT TO BOBBIE GRANT, OFFICE OF THE REGISTRAR.

0 0

SIMON FRASER UNIVERSITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2000

0 0

13.

Pledges

Pledges made by donors to the university for donations to be received in future years are estimated

at $5,753,000 (1999 - $3,006,000). Pledges are not recorded in the financial statements until the

related donations are received by the university.

14.

Contingencies

Simon Fraser University is the defendant to several unresolved statements of claims. It is not

expected that the ultimate outcome of these claims will have a material effect on the financial

position of the university.

15.

Comparatives

Certain comparative figures have been restated to conform with the current year's presentation.

The change in accounting for non-pension retirement benefits, as per note 7, has been applied

retroactively except that 1999 comparative figures have not been adjusted as it was not practical

•

todoso.

SIMON FRASER UNIVERSITY

FINANCIAL STATEMENTS

MARCH 31, 2000

TABLE OF CONTENTS

Page

•

1. Statement of Management Responsibility

Report of the Vice-President Finance & Administration

Report of the Auditor General

5 ?

4. Audited Statements

Statement of Financial Position

• ?

- Statement of Operations and Changes in Operating Net Assets

- Statement of Changes in Net Assets

- Statement of Cash Flows

5. Notes to the Financial Statements

Page 22

ell.

Pension Plans

The assets and liabilities of both Plans are not reflected in the university's financial statements.

Academic Pension Plan

The University Pension Plan for Academic Staff generally provides benefits on a money purchase

basis, but includes an option to members who were in the plan on March 20, 1973 to choose

benefits based on years of service, and the average of the highest sixty (60) consecutive months'

salary.

An amendment to the plan in 1981 and a letter of agreement between the university and the

Faculty Association in 1990 addressed the funding and the distribution of the formula retirement

benefit account. The latest actuarial valuation for this group as at January 1, 1999 shows an

actuarial liability of $5,694,000 against the actuarial value of assets of $5,984,000 resulting in a

surplus of-$290,000 in the fund.

Administrative/Union Pension Plan

The University Pension Plan for the Administrative/Union Staff provides benefits' based on years of

service and' the average of the highest sixty (60) consecutive months' salary. Under the Pension

Plan:

The university's contribution is based on the amounts estimated 'by the Actuary and

recommended by the Administrative/Union Pension Plan Trustees to the Board of

• ?

Governors of the university. The university shall contribute to the fund such amounts as the

Board of Governors determines are required to fund the retirement benefits.

The latest actuarial valuation as at December 31, 1998, showed an actuarial liability of

$96,243,000 against market value assets of $111,730,000, resulting in a surplus of

$15,487,000. The university shall not suspend or reduce its contribution to the pension fund

without the prior approval of the employee organizations. Pursuant to an agreement

between the university and the employee organizations, the portion of the surplus in excess

of 15% of the defined-benefit portion of the above liabilities with assets taken at market

values was distributed to members. $1,743,000 of the above surplus, plus investment

earnings thereon, was distributed to the members in November 1999; the amounts

distributed were, to the extent permitted under the Income Tax rules, allocated to individual

money-purchase accounts for the members, within the Plan, and the balance was paid out

in cash.

C. ?

The rate of employer contribution was also increased from 10.82% to 11.61%, effective

January 1, 1999, as indicated by the 1998 actuarial valuation.

12. ?

Financial Instruments

The financial instruments consist of cash and short term investments, accounts receivable,

investments, accounts payable and accrued liabilities and long term debt. It is management's

opinion that the University is not exposed to significant interest, currency or credit risk arising from

these financial instruments.

Page 21

The General Operating is composed of carryover funds for faculties and departments under

policy that allows them to carry over unspent budget. It also includes unspent balances on speci

projects, internally funded research already in progress, funds set aside for specific provisions and

one-time non-recurring expenditures as approved by the Board of Governors.

The Ancillary Enterprise represents accumulated funds held for the ongoing operations of

ancillaries such as the Bookstore, Food Services, Microcomputer Store, Residences and Parking.

Capital represents funds that are committed to capital projects.

Specific purpose represents funds from various sources that are allocated internally to specific

activities.

The funds committed for long term commitments are set aside to meet the cost of future

obligations.

a. Group insurance is designated for potential requirements related to self-insured long-term

disability plans. Annual premiums are funded from the general operating funds on a cost of

claim plus fee for services basis.

b. Lease commitment funds provide for commitments entered into for the occupancy of the

University's Harbour Centre facility which include lease payments, tenant loan payments and a

contribution towards operating costs. Lease and tenant loan obligations include annual

payments of $1,140,000, which started in September 1988 increasing to $1,648,000 over the

term of the lease, and a termination payment of $8,000,000 upon the expiry of the lease

December 2017 or a discounted equivalent of that amount at an earlier date.

Self-insurance funds are held to pay self-insured property and liability losses.

0 ?

STATEMENT OF MANAGEMENT RESPONSIBILITY

The university is responsible for the preparation of the financial statements and has

prepared them in accordance with generally accepted accounting principles for not-for

profit organizations. The financial statements present fairly the financial position of the

university as at March 31, 2000 and the results of its operations for the year then

ended.

In fulfilling its responsibilities and recognizing the limits inherent in all systems, the

university 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 reliable basis for the preparation of financial statements.

The Board of Governors carries out its responsibility for review of the financial

statements principally through its Audit Committee. The majority of the members of the

Audit Committee are not officers or employees of the university. The Audit Committee

meets with Management and the external auditors to discuss the results of audit

examinations and financial reporting matters. The external auditors have full access to

the Audit Committee, with and without the presence of Management.

The financial statements for the year ended March 31, 2000 have been reported on by

the Auditor General of the Province of British Columbia, the auditor appointed under the

• ?

University Act. The Auditor's Report outlines the scope of his examination and provides

his opinion on the fairness of presentation of the information in the financial statements.

Endowment Principal

2000 ?

1999

(000)

Balance, beginning of year

Capitalized income and other transfers ?

1,465 ?

2,638

Balance, end of year ?

L!°87 ?

$81 .288

Endowment consists of restricted donations to the University. The investment income generated

from endowments must be used in accordance with the various purposes established by the donors

or the Board of Governors. Donors as well as university policy stipulate that the economic value of

the endowments must be protected by limiting the amount of income that may be expended, and

reinvesting unexpended income. Included in the $84,087,000 are the following receivables:

SFU FoUndation ?

$6,754,000 ?

Future proceeds from sale of 20 lots

City of Bumaby ?

$2,000000 ?

$1 million was received in April 2000

and the remaining $1 million due in

Finance & Administration

Page 20 ?

Page 1

Operating fund (000's)

Budget

Actual

1999/00

1998/99

Revenue

Expenses

Student financial assistance

4,924

51499

5,103

Utilities and janitorials

Net change in fund balance

(3,085)

2,411

Appropriations opening balance

21,140

18,729

Total Appropriations

18,055

21,140

This statement reflects the format of the 1999-00 operating budget, approved by the Board

of Governors in June 1999. It groups expenses in a different format than the audited statements.

The summary of the appropriations of $18,055 at March 31, 2000 has been extracted

from note 9 to the financial statements.

mary

Carryovers: Departmental

Auxiliaries and Special projects

Research and other contracts

Specific Provisions

Non-recurring expenditures

8. ?

Deferred Contributions

In the prior year, the Province of British Columbia enacted legislation that released educational and

other institutions from debt obligations where principal and interest payments were funded by the

Province. As such $152,506,000 of debt formally recorded as a liability of the university is now the

responsibility of the Province. The assumption of debt is treated as a deferred contribution and is

amortized to income over the remaining useful life of the assets.

Deferred contributions represent unspent resources externally restricted for a particular use relating

to a subsequent period. Changes in the deferred contributions are as follows:

Sponsored

Specific

Research

Purpose ?

Capital ?

2000

1999

received during the year

29,072

36,591

5,322

152,506

Balance end of year ?

Under the deferred method of accounting

for contributions, restricted contributions related to

expenses of future periods are deferred and recognized as revenue in the period

in which the

related expenses are incurred.

The $189,790,000 of deferred capital contribution represents the

"unamortized" portion of restricted capital advances relating to assets which were purchased

with

restricted contributions, but which still have an

undepreciated book value.

Restricted for Specific Commitments

20001

1999

(000)

General Operating

Carryovers - faculties & departments

$4,941

$4,910

Auxiliaries and special projects

3,771

3,756

Research and other grants

5,978

5,632

Specific provisions

1,424

2,224

Non-recurring expenditures

1,941

4,618

Total General Operating

18,055

21,140

Ancillary enterprises

3,383

8,508

Long-term commitments•

16,563

Total restricted for specific commitments

$63,561

$63 585

REPORT OF THE VICE-PRESIDENT FINANCE AND ADMINISTRATION

General comment

The university prepares its annual financial statements according to generally accepted accounting

principles for non-profit organizations. The operations for the entire entity have been combined

for reporting purposes. However, we continue to manage internally on a fund basis

and I am pleased to provide this additional information for the different funds

Page 2

Page 19

...Long Term

Debt

Total

$3,294

$2,622

$2,447

Employees Future Benefits

Retirement Benefits - Change in Accounting Policy

New accounting standards issued by the Canadian Institute of Chartered Accountants require the

use of accrual accounting for costs related to employee future benefits including the cost of non-

pension benefits that will be paid to existing and future retirees. This is a significant change from

the previous practice of accounting for these costs on a "pay-as-you-go" basis. This change has

been applied retroactively except that

1999

comparative figures have not been adjusted as it was

not practical to do so. The cost of these future benefits is determined by an actuary and the costs

are recognized over the service life of the employees or the period to full eligibility of the employee

group depending upon the type of cost.

The actuarial valuation provides the present value of benefit obligations as well as the current costs

and the interest cost on the benefit obligation. The benefit obligation at March

31, 1999

$10,961,000.

This retroactive adjustment is reflected in our financial statements as a decrease

;b ?

opening Operating Net Assets. For the year

on the benefit obligation are included in benefits expense for the year.

The following shows the effect of these changes to the Financial Statements

(000)

Opening balance

$ ?

Retroactive adjustment for benefit obligation

10,961

Opening balance, as restated

10,961

Current costs

547

Interest cost on benefit obligation

698

Less actual payments to retirees during the year

(118)

Increase in employee future benefits

An actuarial valuation at March

31, 2000

shows a benefit obligation of

$10,217,000.

The difference

from the above balance is due to an unamortized actuarial gain of

$1,871,000

based on a revised

interest discount assumption of

31,

6.25%

A portion of this gain over and above a threshold amount is to be amortized at

$77,000

per

year over the next eleven years starting April 1,

2000.

estimated to be

$1,136,000.

The net benefit expense for

2000/2001 i

Operating Fund

In 1999/2000,

tuition fees and related mandatory course fees remained frozen for

the fourth year, through the provincial Tuition Fee Freeze Act. The Province did

provide $222,000 in recognition of this fact. Funding was also provided at

$1,792,000 for 256 new undergraduate spaces. No reductions were necessary

in order to balance the operating budget, although few additions were

accommodated in the budget. Non-discretionary items such as merit and

progress related salary increases and benefit rate increases were covered. The

university was then able to increase the library acquisitions budget and fund

several new positions. No general inflationary increases were made to operating

budgets; this continues to be a problem in

2000/2001

as the university attempts

to fund new ventures and directions with limited resources while still maintaining

core operations.

The past several years have seen a fine-tuning of the operating budgets as

departments juggle priorities and focus on essential services. Central budgets

have been stretched to yield the maximum dedicated source of funding. The

university completed the final move towards decentralization this year by

transferring staff support carryovers and management to the departments.

Instructional and non-salary budgets had been decentralized in prior years. We

had anticipated and did observe a reduction in the funds available at year-end to

fund the central non-recurring budget. In 1998/1999 approximately $4,618,000

was generated to fund these one-time requests. This year that amount fell to

$1,941,000. Several other one-time sources were accessed to bolster the

funding somewhat, but at $2,756,000, the non-recurring budget for

2000/2001

sits at approximately half of that of 1999/2000.

Revenues exceeded both 1998/1999 actual and the 1999/2000 budget. The

Provincial operating grant growth over 1998/1999 reflects the addition of funding

to support new undergraduate spaces, some compensation for the tuition freeze

and the final year of CUPE Pay Equity funding. The increase in student fees

versus 1998/99 is related to increases in enrolment; the increase relative to the

budget is a result of non-credit activity. Investment income remains strong due to

a solid investment base and capital gains. The budget, although increased

slightly in

2000/2001,

remains conservative in recognition of the capital gains

element and the fluctuating market environment. Other income is declining as

the CIDA Eastern Indonesia project and associated overhead, winds down. This

budget does vary however as it includes overheads from ancillaries and research

projects, centrally assessed student fees and miscellaneous revenue.

For the past several years, total expenditures, including those supported by

funds carried over from previous years, have been below budget and

appropriations have grown. This year appropriations fell by $3,085,000. There

was no significant change to the carryovers for departments, special projects and

internally funded research contracts and overhead. The balance available for

Page 18

Page 3

centrally funded specific provisions and the non-recurring budget was reduced by

$3,500,000. A major factor in this reduction to central funds was the transfer of

support staff carryover to the departments. However, unanticipated increases in

recruiting and utilities expense, less investment income and tuition fees above

budgetary requirements have additionally eroded the traditional non-recurring

budget funding sources. It should also be noted that the transfer of

approximately $1,000,000 in support staff carryovers to the departments has

allowed them to simply maintain their balance of last year; instructional

carryovers are being used for a variety of expenditures. Instructional carryovers

have decreased by $1,088,000 this year versus last.

The increase in the operating grant may alleviate some of the problems in the

departments, where targeted funding has been provided for enrolment growth

costs and new initiatives. The availability of central funding to support the non-

recurring budget in 2000/2001 remains a concern.

Ancillary Enterprises.

Included in Ancillary Enterprises are the Bookstore,. Food Services, Residences,

Parking Operations and the Microcomputer Store. Ancillary Enterprises are

mandated to break even but are allowed to retain their surpluses for future

upgrades to facilities, equipment replacement and for new service initiatives.

The decrease of $70,000 shown in note 9 in the Ancillary Fund in the current

year is due mainly to the purchase of a Point Of Sale system for the bookstore's

main campus and downtown locations.

The Parking Operation supports all

!ot

and parkade construction, as well as

repair and maintenance. This unit continues to promote improved personal

security. Currently a closed circuit television network is being developed,

extending from perimeter parking lots through to a higher security pedestrian

corridor and further to the residence areas of campus. This will be monitored

centrally by Campus Security. In addition, all landscaping around parking lots has

been altered to provide sight lines in a further effort to provide greater personal

safety.

Residences maintained full occupancy during the fall and winter semesters and

50% in the summer semester. In the summer semester there were 420 rooms

available for conferences. Eighty-six groups were accommodated for a total of

16,500 bednights.

Food Services on the Burnaby campus is operated by Beaver Foods Ltd. who

also operates the Diamond University Centre.

Capital Assets

2000

2000

Accumulated

Cost

Depreciation

Leasehold improvements

Equipment & furnishings

acres of land in Burnaby is recorded in the financial statements at its 1965

assessed value

$572,000. Up

to 100 acres of this land has been earmarked for development by the Burnaby

Mountain Community Corporation. The downtown land for the Centre for Dialogue was assessed

$1,148,000

in July 1998.

Long-Term Debt

2000

1999

2,741

27,348

(4,413)

Term loans, used to complete the Centre for Dialogue, are secured by promissory notes. They

bear interest rates between

6.07%

and

6.80%,

have an amortization period of

15 years and are

due between January

30, 2001 and December

30, 2004.

Other long-term debt annual principal and interest payments are funded through a charge to

Ancillary Enterprises operations and from contributions from the Simon Fraser Students Society for

a portion of the Maggie Benston Student Services Building.

CMHC Mortgages issued by the Canadian Mortgage and Housing Corporation are secured by

student residence buildings. They bear interest rates between 5.375% to 6.875% and mature

between January 1, 2017

and July 1, 2019. Annual payments including principal and interest until

maturity amount to

$248,000.

05.

2000

1999

Net

8,122

26,279

$295.227

Debentures are issued to the Province of British Columbia pursuant to the Financial Administrative

• Act. They bear interest at rates from 6.0%

to 9.5%, and mature between

debentures are secured by student residence buildings. Annual payments including principal and

interest due within the next five years are as follows:

2000

1999

The university's endowment fund consists of restricted donations to the university

and internal allocations, the principal of which is required to be maintained in

The investment income

from endowments can be spent

1999

only in accordance with the various purposes established by the donors or the

university's Board of Governors:

The Endowment Fund investment strategy aims to maintain the purchasing

power of the original capital value of endowments for future generatiOns.

6:5

2% ?

ensures that spending allocations remain stable each year through the use of an

5.9

6.64% ?

43,844 ?

7.16%

income stabilization fund. The Endowment Fund is invested in bonds and equity

6.4

6.37% ?

81,911

markets to meet this strategy over the long term.

5.5

6.05%

This fund received $1,334,000 in new donations during the year and $1,465,000

of interest income was capitalized in order to protect the economic value of the

1,699

endowments. The fund stands at $84,087,000 at the end of the fiscal year.

$83,610

Specific Purpose

Bonds and Debentures Analysis

Sub-total active bonds

Pooled indexed bonds

Sub-total external*

Internal/variable rate**

2000

Long-Term Investments

Long-term investments at fiscal year end are comprised of the following:

Bonds and Debentures

Canadian equities

Foreign equities

Sun Life Term Certain Annuity

The Vancouver Foundation holds a number of endowment funds for the benefit of the university.

university is included in the university's financial statements.

In the fiscal year

1999/00

these funds generated

$618,000

of income for Simon Fraser University

(1999 - $575,000)

to be used for specific purposes.

. ?

Research

University research is mainly funded by Federal agencies such as NSERC and

SSHRC and the provincial government, although over $6 million comes from

corporations and other non-profit organizations. As an example, the Juvenile

Diabetics Foundation is funding a $2;7 million research project over three years.

The National Centre of Excellence for Teleleaming continues to bring in $3.6

million per year of which $3 million is distributed to other universities. SSHRC

initiated a new program this year, the Strategic Theme Grants program, to fund

research networks. SFU will

be receiving $2 million over four years under this

program. There are over 1200 active research accounts with total activity of $25

million compared to $21 million' in 1998/99.

The new Canada Research Chair program administered by the three granting

councils in partnership with the Canada Foundation for Innovation and Industry

Canada will provide funding for 48 chairs at SFU. Funding is provided over a five-

year period and may be used for research and infrastructure support as well as

recruitment costs, salaries and benefits.

Endowment

Notes:

During the fiscal year approximately

$81.5

million of the University's bond portfolio, which was

internally managed, was transferred to two different external investment managers. Half of the

portfolio was converted to an indexed passive mandate while the other half remained as an active

mandate.

** ?

$8.7

million of these holdings were sold May 1, 2000 to fund a portion of the university's $10 million

participation in the new Commonfund Canada bond pool.

The sources of specific purpose funds include government and corporate grants,

conference fees, private donations and interest income from endowments for

scholarships. There are many international activities; the Canadian International

Development Agency funds projects in Indonesia, the Philippines, China and

Ghana. Field Schools funded by participants were held in China, Fiji, Prague

• ?

and Ghana. The Faculty of Education also has a number of smaller international

initiatives in Jamaica and Japan, as examples.

2000

Bonds maturing under one year

1999

A grant of $3.4 million was received this year from Forest Renewal B.C. and the

ii. ?

The university is one of four parties to a joint venture agreement under which research

interest earned on the grant is used to establish, within the SFU Earth Sciences ?

is conducted by university faculty members at the Tr-Universities Meson Facility

Program, a provincial centre of excellence in teaching and research. This centre ?

(TRIUMF) on the University of British Columbia campus and elsewhere. The facility and

is focused on the geoscience challenges facing the forest industry of B.C.

its operations are funded by federal government grants and the university makes no

direct financial contribution. The accounts of TRIUMF are not included in these

Activity in the fund this year was $22 million compared to $20 million in 1998/99.

statements. There is no expectation of monetary gain to the university from this

venture.

Ca p ital

iii. ?

The university owns 100% of the shares of SF Univentures Corporation (SFUV), which

was established to promote technology transfer to the private sector. The consolidated

No new capital construction has been undertaken for approximately four years

assets of SFUV are not considered to be material and are not included in these financial

and is a concern as enrolment targets are increased each year and space

statements.

becomes increasingly constrained.

iv.

The Simon Fraser University Foundation was established in 1987 under the provisions

of the University Foundations Act.

Its main purpose is to receive, manage and invest

expenditures amounting to $6.8 million for the year. Funding sources for this

funds to further the purposes of the university.

The Province of British Columbia

project include a $4.0 million Federal government grant, private donations of $7.0

through the Minister of Finance and Corporate Relations is the single shareholder.

million and a bank loan of $6.3 million.

March 31, 2000 the Foundation is holding residential lots valued at $7,033,000 (1999 -

$6,986,000) and the proceeds from the sale of those lots will be transferred to the

Provincially funded minor capital cyclical maintenance on campus buildings

University.

Assets and liabilities of the Simon Fraser University Foundation amounting

to $7,148,000 (1999 - $7,583,000) and $6,867,000 (1999 - $7,270,000) respectively are

not included in the financial statements of the university

renovations and upgrades.

v. ?

On February 10, 1999 the Burnaby Mountain Community Corporation was incorporated

New Initiatives

under the Company Act of the Province of British Columbia.

It is a taxable Canadian

corporation and is wholly owned by Simon Fraser University. The purpose of the

Corporation is to convert up to 100 acres of university land into a village of up to 10,000

Simon Fraser University will receive funding for forty-eight

Canada Research

residents. Since 1995 the university has paid $1,349,000 (1999- $851,000) for salaries,

Chairs

over a five-year period. The funding may be used for salaries and

environmental studies as well as preliminary architectural drawings on behalf of the

infrastructure support. ?

•.

Corporation. These expenses are not included in the expenses of the university but are

included as a receivable from the Corporation to be repaid when the Corporation

The

Morris J. Wosk Centre for Dialogue,

a world class conference facility,

becomes profitable. In the event that this receivable became uncollectible, the university

located in a heritage building across from the downtown Harbour Centre campus

would have to write off this amount.

will be officially opened in September. ?

Of the $18 million needed to build the

Centre, the university has now raised $17.3 million, including a $6.3 million loan.

. ?

Cash and Short Term Investments

An architectural firm has been chosen to lead the first phase of development for

the

Burnaby Mountain

Community

project. Hotson Bakker Architects was

selected to begin the process of preparing planning options and a preferred

planning framework for development which will take place in the east end of

campus.

Values and Commitments

document was prepared following consultation

with over 200 students, faculty, staff, alumni and friends of the university.

Although the original intent was to create a mission statement for the university,

what evolved were the following values held by our community:

Page ? . ?

Page 15

SIMON FRASER UNIVERSITY

VALUES AND COMMITMENTS

We are an open, inclusive university ?

We champion the liberal arts and

whose foundation is intellectual and ?

sciences and pioneering

academic freedom.

interdisciplinary and professional

ft

?

programs.

Our scholarship unites teaching and

research: we celebrate discovery,

diversity and dialogue.

We are a university where risks can

be taken and bold initiatives

embraced.

C. ?

Capital

Capital

Assets

asset acquisitions are recorded on the statement of financial position at cost, except

.donated assets which are recorded at fair market value at the date of acquisition. Depreciation is

recorded on a straight line basis over the estimated life of the asset as per the schedule below.

Equipment and furnishings

8 years

Computing equipment

3 years

Leasehold improvements

Term of

Lease

Works of art and collections are not amortized and include that portion of library assets considered

to have permanent value.

Investments

Our students and communities

expect teaching that is personal, and

learning opportunities that are

lifelong.

UPON THESE FOUNDATIONS,

we will engage all our communities

in building a robust and ethical

society.

Short term investments are recorded at the lower of cost or market value.

Long term investments, which consist of marketable securities and real estate, are carried at cost

or, where donated, at their fair market value at the date of the ownership transfer of these assets to

the university. Where there has been a decline in the value of an investment that is not considered

temporary, the investment is written down to net realizable value.

Gains and losses on sales of these investments are recognized in the year of disposal and a•

included in investment income.

Inventories -

Inventories of supplies kept at Central Stores are recorded at cost. Inventories of merchandise

held for resale in the Bookstore.and the Microcomputer Store are recorded at the lower of cost and

net realizable value.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting

principles 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 expenses during the reporting period. Actual results could differ from

management's best estimates as additional information becomes available in the future.

University Interests in WCUMBS, TRIUMF, SFUV, SFU Foundation and Burnaby Mountain

Community Corporation

i. The university is one of five university members of the Western Canadian Universities

Marine Biological Society (WCUMBS) which operates a research station at Bamfield,

British Columbia. The university's operating grant to the Society was $176,000 (1999 -

$176,000) and is recorded as an expenditure by the university. There is no expectation

of monetary gain to the university from this venture. ?

• ?

SIMON FRASER UNIVERSITY

. ?

Report of the Auditor General ?

NOTES TO THE FINANCIAL STATEMENTS

. ?

of British Columbia ?

. ?

? . ?

. ? .

FOR THE YEAR ENDED MARCH 31,2000

1. ?

Authority and Purpose ?

the Members of the Board of Governors

. ?

Simon Fraser University is an agent of the Crown and operates under the authority of the University

ofSzmon Fraser University

Act, R

Chapter 468 The purpose of the university is to conduct research and deliver a full range

of undergraduate, graduate and continuing studies programs. Simon Fraser University is a not-for-

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. profit entity governed by a Board of Governors, the majority of which are appointed by the

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provincial government of British Columbia The academic governance of the university is vested in

I have audited the statement of financial position of

Simon Fraser University

as at

section 149 The university isaregistered chanty and is therefore exempt from income taxes under

of the Income Tax Act. The university receives a significant portion'of

its revenues

March 31, 2000 and the statements of operations and changes in operating net assets, changes in.

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from the Province of British Columbia.

net assets and cash flows. These financial statements are the responsibility of the University's .

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management. My responsibility is to express an opinion, on these financial statements based on

2. ?

Summary of Significant Accounting Policies and Reporting Practices

my audit.

a. ?

Accounting Method

I conducted my audit in accordance with generally accepted auditing standards. Those standards

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require that I plan and perform an audit to obtain reasonable assurance whether the financial -

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The financial statements are prepared on a non-fund basis as the operations for the entire

statements are free of material misstatement. An audit includes examining, on a test basis,

university have been combined for reporting purposes. The university follows the accrual basis of

accounting. Unrestricted revenue is recorded when receivable and expenditures are recorded when

goods or services are received..

management, as well as evaluating the overall financial statement presentation

b ?

Revenue Recognition

In my opinion, these financial statements present fairly, in all material respects, the financial

Operating grants are recognized in the period when receivable Operating grants received for a

position

of Simon Fraser University

as at March 31, 2000 and the results of its operations and its

future period are deferred until that future period and are reflected as deferred contributions

cash flows for the year then ended in accordance with generally accepted accounting principles.

Amounts received for tuition fees and sales of goods and services are recognized as revenue at

the time the goods are delivered or the services are provided. Otherwise, these amounts are

classified as unearned revenue in accounts payable.

Externally restricted contributions for purposes other than endowment or the acquisition of capital

Victoria, British Columbia ?

Wayne Strelioff, CA

assets are deferred and recognized as revenue in the year in which the related expenses are

May 26 2000

Auditor General ?

incurred. Externally restricted amounts can only be used for purposes designated by the.

contributors

Externally restricted capital contributions are recorded as deferred contributions until the amount is

invested to acquire capital assets. Amounts invested representing externally funded capital assets

are then transferred to unamortized deferred capital contributions. Capital contributions are

deferred and amortized to revenue over the life of the related asset.

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Endowment donations are recognized as a direct increase in endowment principal. The university

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has a policy to protect the economic value of the endowments whereby a portion of the income

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earned on endowments is recorded as a direct increase in endowment principal.

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Gifts-in-kind are recorded at fair market value on the date of their .donation or at nominal value,

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when the fair market value cannot be reasonably determined.

Page ? 'S ?

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Page 13

SIMON FRASER UNIVERSITY

STATEMENT OF OPERATIONS and

CHANGES IN OPERATING NET ASSETS

FOR THE YEAR ENDED MARCH 31, 2000 ?

(thousands of dollars)

Statement 2

2000

1999

REVENUE

Government grants and contracts

Province of British Columbia

128,406

Student fees - credit courses

5,520

Gifts, grants and contracts

14,042

9,913

Sale of goods and services

22,388

Amortization of deferred capital contributions

EXPENSE

- other instruction and research

25,020

Employee benefits (Note 7)

25 153

22,444

Travel and personnel costs

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8,999

8,092

Supplies and expenses

Grants to other agencies

3,593

3,028

Equipment and facility rentals

Scholarships, fellowships and bursaries

Renovations and alterations

3 378

2,861

Debt servicing - interest ?

2,635

EXCESS OF REVENUE OVER EXPENSE

5,737

6,380

CHANGES IN NET ASSETS

Decrease (increase) in specific commitments

(6,515)

(Increase) decrease in investment in capital assets

(6,988)

NET CHANGE IN OPERATING EQUITY

(1,227)

(100)

OPERATING NET ASSETS, beginning of year,

as previously stated

(2,850)

(2,750)

Prior period adjustment (Note 7)

_Ji0961)

Opening balance, as restated

(13,811)

(2,750)

OPERATING NET ASSETS, end of year

(2,850)

63,585

63,585 ?

3,766

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2,638

6,515

63,561 ?

85,428

Capital Assets Endowment

Commitments

Principal

NET ASSETS, beginning of year,

as previously stated

Prior period adjustment (Note 7)

NET ASSETS, beginning of year,

adjusted

Net change in operating equity

Endowment contributions. ?

5 ?

Sital preservation of endowment

Change in investment in capital assets

Amortization of deferred capital

contribution

Capital asset acquisitions

Debt repayment

Deferred contributions

Depreciation

Internally imposed restrictions

CHANGE IN NET ASSETS

NET ASSETS, end of year

SIMON FRASER UNIVERSITY

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED MARCH 31, 2000

(thousands of dollars)

Statement 3

1999

Statement 4

SIMON FRASER UNIVERSITY

Statement 1

STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2000

SIMON FRASE

R UNIVERSITY

(thousands of dollars)

STATEMENT OF CASH FLOWS

MENEM

1999

FOR THE YEAR ENDED MARCH 31, 2000?

(thousands of dollars)

UJ;f

Cash and short-term investments (Note 3)

Capital assets (Note 5)

Unamortized debt discount

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Accounts payable and accrued liabilities

21,691

16,367

Current portion of long term debt (Note 6)

Employees future benefits (Note 7)

12,088

Long-term debt (Note 6)

29,159

24,593

Deferred contributions (Note 8)

Deferred contributions related to capital assets (Note 8)

Restricted for specific commitments (Note 9)

Invested in capital assets

OPERATING ACTIVITIES

Excess of revenue over expense

Add (deduct)

Depreciation

Net decrease in non-cash current assets

Net increase (decrease) in accounts payable and accrued

Amortization of deferred'capital contributions

Increase in deferred contributions

Endowment contributions

Increase in employees future benefits (Note 7)

CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

Net increase in long term investments

Capital asset acquisitions

CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES

Net debt principal incurred (repayments)

CASH PROVIDED USED IN FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH AND ?

SHORT TERM INVESTMENTS

CASH AND SHORT TERM INVESTMENTS, beginning of year

CASH AND SHORT TERM INVESTMENTS, end of year

The accompanying notes are an integral part of these finani

Finance and Administration

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