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Annual Report British Columbia’s Chartered Professional Accountants2015/2016

Fiscal 2015-2016

Vision

The Canadian CPA is the pre-eminent,

globally respected business and

accounting designation.

Chartered Professional Accountants of BC Mission

CPABC enhances the influence, relevance, and value

of the Canadian CPA profession by:

Protecting the public interest;

Supporting its members and students; and

Contributing to economic and social development.

On the cover: Ingram Publishing/Thinkstock

2015/2016 CPABC Annual Report 1

Table of Contents

CPABC Chair and President & CEO’s Message ........................................................ 2

Management’s Discussion and Analysis .................................................................... 5

CPAs in British Columbia - The Membership at a Glance

Unification of the Accounting Profession

Key Accomplishments in BC Public Trust and Ethics Education and Qualification Brand and Reputation Member Engagement

Financial Performance

The Environment in which CPABC operates ...........................................................21

Strategic Risks and Risk Management

Financial Risks and Risk Management

Capability to Deliver Results

Key Performance Drivers

Outlook for 2016/17 ..................................................................................................... 27

Governance and Leadership ......................................................................................29

Financial Statements ...................................................................................................30

2 2015/2016 CPABC Annual Report

CPABC Chair and President & CEO’s MessageBy Olin Anton, FCPA, FCA and Richard Rees, FCPA, FCA

Bill 4, the Chartered Professional Accountants Act, was proclaimed on June 24, 2015. This historic milestone was the culmination of years of work, collaboration, and commitment towards creating a new, unified profession that represented the best of our legacy designations.

The new board came into effect at proclamation with the amalgamation of the Institute of Chartered Accountants of BC (ICABC), Certified Management Accountants Society of BC (CMABC), and the Certified General Accountants Association of BC (CGA-BC), ending the three-way joint venture agreement that came into force on October 1, 2013.

None of this would have been possible without the efforts of past council and board members, and we would like to acknowledge and thank those leaders who began this fiscal year prior to the new board taking the helm, namely, Dan Little, FCPA, FCA, president of ICABC, Brian Friedrich, FCPA, FCGA, chair of CGA-BC, and Simon Philp, FCPA, FCMA, chair of CMABC. They and their colleagues on the legacy council and boards ensured a smooth transition was made, and the new board was well positioned for success.

BC was not alone in achieving this milestone, and across the country CPA legislation was passed in almost every Canadian province. CPA Canada now represents over 200,000 professional accountants from coast to coast. This is an exciting time for the profession as the final stages of unification are being put in place for everything from education to regulatory and code of conduct harmonization.

With the establishment of CPABC the final transition to the new organization began this past year. One of our key activities was communications and education and ensuring that our members were aware of any new provisions in the CPABC Act, bylaws, and Code of Professional Conduct. We began new timing and cycles for member dues, firm and licensee billing, and professional development. It became mandatory for members with a legacy designation to tag it with the new CPA designation, and CPA firms needed to change their name to reflect the new designation (with no

tagging) by December 31, 2015. In addition, new CPA certificates were distributed and members were asked to update their contact information and communications preferences.

Change continues and it will take time for members to become familiar with the new CPA regulatory regime, and we would urge all members to stay abreast of what is happening in their profession – ultimately, it is the responsibility of each CPA to ensure they are compliant and on side with new regulation.

CPABC worked hard over the past year to deliver on our legislated mandate. We regulated our membership by upholding standards, ensuring protection of the public interest; provided exceptional services through education, benefits, and other opportunities; and advocated for our membership and ensured the profession and CPAs were viewed within the broader marketplace as thought leaders on business and accounting matters, and that issues important to the profession were furthered.

This fiscal year marked the transition from joint operations for the three-way CPABC Joint Venture to one unified organization. While extensive planning and integration in many areas had taken place in order ensure a smooth transition, the regulatory and financial transition could not begin until after legislation.

To that end, after June 24, 2015 the work began on implementing processes for the new regulatory regime, the finances for the three legacy organizations were fully integrated and transitioned from three separate accounting systems to one, and core organizational functions such as payroll timing and human resource policies were integrated. In order to accomplish these achievements, extensive IT support was required, and the legacy databases were also merged into one new system. Work continues to enhance and evolve these policies and processes in order to deliver the best services possible to the membership. While all this work was taking place, CPABC also moved into its new office space at Harbour Centre on August 4. CPABC also continued to play a leadership role in national governance, branding, regulation, and education.


Olin Anton, FCPA, FCA Chair

Richard Rees, FCPA, FCA President and CEO

In September, the first candidates through the new CPA Professional Education Program wrote the first common final examination (CFE), and 331 successful writers have either finished their experience requirements and become a CPA, or are working towards membership.

This report summarizes all of the important work that has taken place over the past year. While there were challenges as this transition progressed, they created opportunities for success as we worked through the implementation of many important initiatives. In so doing, maintaining a strong financial footing was paramount. While there were many one-time costs associated with establishing the new organization, we are building a sustainable organization capable of protecting the public and delivering superior member and student programs and services.

Looking ahead, the transition and integration should be moving into its final phase, and as these activities cease, we expect to find additional economies of scale. Work will continue on building the CPA brand and ensuring members have the support they need to be successful, and that they fully understand the new requirements for maintaining their designation. There will also be a change in leadership for CPABC, as Richard Rees will be leaving the organization at the end of 2016. Rather than retire, he plans to reposition himself, and assess what the next phase of his professional life will be.

This next year will be the first full year of the new profession, and we believe the positive momentum will continue. We expect our members to continue to embrace the new designation and work with us to build CPA’s reputation for integrity and excellence in business leadership and strategic management, and to ensure our proud legacy continues for generations.

Dated June 14, 2016


Over 24,000 participants attended PD courses

Above infographic: Blair Robertson/Blindfolio Design

Unique web visitors 42,000

THIS WAY FORGROWTH

Most Industry positions are clustered in

Leadership roles

34,000 Membership Certificates

H E R E

2,500 NEW INTERNATIONAL MEMBERS FROM A NATIONAL BODY


Management’s Discussion and Analysis

Introduction

This past fiscal year the accounting profession continued the transition to the new CPA designation. The Institute of Chartered Accountants of British Columbia (ICABC), the Certified Management Accountants Society of British Columbia (CMABC), and the Certified General Accountants Association of British Columbia (CGA-BC) implemented a joint Integrated Plan and Budget for 2015/16 as the Chartered Professional Accountants of BC (CPABC) Joint Venture, and ended the year amalgamated into the newly established CPABC organization.

The proclamation of the Chartered Professional Accountants Act on June 24, 2015 culminated the amalgamation of the legacy bodies and created the new CPABC organization. Therefore, this Management Discussion & Analysis (MD&A) will present and discuss the operations of CPABC before and after proclamation on June 24, 2015, including a discussion of the operations, performance, and financial condition of CPABC for the period ended March 31, 2016, and the plans and outlook of the accounting profession in BC for fiscal 2016/17. The MD&A should be read in conjunction with the audited financial statements for CPABC.

CPAs in British Columbia – The Membership at a Glance:

Where CPAs Work

63%17%

11%7% 2%

By Location

Vancouver/Lower Mainland Outside BC Vancouver Island Okanagan/Kootenay Rest of province

62%

18%

11%

9%

Industry Public Practice Retired Not Reported

By Sector


The Chartered Professional Accountants of Canada

All of the national and provincial bodies representing Canada’s more than 200,000 professional accountants had legislation either proclaimed or passed by their respective provincial legislatures:

• Quebec and Ontario (representing over 50% of Canadian members) are under the CPA banner. CPA Ontario is currently being governed under the old CA Act, and is working with the government to pass new CPA legislation.

• Legislation was proclaimed in New Brunswick in September 2014, Saskatchewan in November 2014, Newfoundland and Labrador in January 2015, PEI in April 2015, BC in June 2015, Alberta in July 2015, and Manitoba in September 2015.

• CPA legislation received Royal Assent in Nova Scotia in December 2015.

Unifying bodies in the Yukon, Northwest Territories, and Nunavut are working with their governments to pass CPA legislation, which is expected to happen in 2016. In April 2016, legislation was introduced in the Yukon and proclamation is anticipated for later this year.

The CPA profession across Canada agreed to adopt common or similar missions, values, and strategic objectives. In addition, work on national committees was extensive with British Columbia playing a leadership role. Significant progress was made on the four core areas of focus; these areas are also critical to the success of CPABC, namely:

• Public Trust and Ethics

• Education and Qualification

• Brand and Reputation

• Member Engagement

Quick Facts about the Profession and CPABC

The majority of members that trained in industry went through the experience verification pathway training route. This route is expected to see the most growth in the coming years and is critical in meeting our profession’s labour market needs.

Most industry positions are clustered in leadership positions including the executive, CFO, or controller roles and almost 50% of industry positions are in small or medium-sized businesses with few to one designated in house accountant.

Public practice, given its high public profile, is often seen as “the profession.” However, many who train in public practice leave for industry within five years of receiving their designation.

Effective April 1, 2015, CPABC took on the administration of international members with no provincial affiliation, and received approximately 2,500 new international members from CPA Canada.

The production and distribution of over 34,000 CPABC membership certificates began in October 2015 and was completed in April 2016.

On-line member (and firm) directories became available in October 2015 enabling the public to confirm CPABC members/firms.

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Unification of the Accounting Profession in BC On March 25, 2015, Bill 4, the Chartered Professional Accountants Act, received Royal Assent in the British Columbia legislature, and proclamation took place June 24, 2015, with the new board taking over the leadership helm. Up until this point, CPABC’s Transitional Steering Committee (TSC) undertook significant ground work that ensured establishing the new organization went as smoothly as possible.

Integration is now complete in all functional areas and work this past year focused on building new organizational infrastructure and implementing CPABC’s new processes and policies.

The new regulatory regime for membership, CPD, practice registration and inspection, discipline, and ethics is in effect, in addition to the CPA Bylaws and Bylaw Regulations and the Code of Professional Conduct. All members should now be using the new designation in conjunction with their legacy designation.

CPABC’s new office space is fully functional and staff have been in one location since August 4, 2015. The former Hastings office location has been sub-leased. The Strategic Opportunity Fund generated by the sale of the Broadway building will provide a unique opportunity for CPABC to benefit the profession and the public interest in the coming years. No decisions have been made on its first use.

The new CPA certification program BC continued working with its national and provincial partners to evolve the new CPA certification programs. The CPA Professional Education Program (PEP) has been in the BC market since September 2013, and the Advanced Certificate in Accounting and Finance (ACAF) was launched in September 2015 by CPA Canada with the support of provincial bodies. In addition, the CPA pre-requisite education platform continued to evolve.

The Harmonized Education Policy was finalized and distributed to the provinces. It is anticipated that this document is fluid and subject to change, and CPA Canada and the Professional Education Development Committee (PEDC) have committed to reviewing and re-releasing it every six months for the foreseeable future in order to ensure the programs continue to meet the needs of students and employers.

Work continued with post-secondary campuses, and the profession collaborated with them to develop transfer credit mappings between their programs and courses and the new ACAF program of studies.

Most significantly, the legacy programs completed their operations. The CPA Western School of Business (CPAWSB) continued to serve all current and new CPA students and candidates, and many legacy students who had not completed their educational requirements chose to be transferred into the CPA PEP program. CPAWSB also began delivering all of the CPA pre-requisite courses beginning September 2015 in addition to PEP.

The CPAWSB board, which was appointed in September 2014, has been fundamental in implementing the new education framework. Program delivery continues to be fine-tuned while funding models and processes for CPAWSB are currently under discussion.


Promotion of the Brand Branding and promoting the CPA designation was one of the guiding principles of unification. An extensive national branding campaign ran in fall and winter 2015/2016, with out-of-home advertising (including airports and bus shelters), online advertising, and select print publications.

National efforts were supported by provincial CPA branding for workforce and post-secondary recruitment, and high profile sponsorships were maintained throughout the year, which positioned CPABC as a business leader and raised awareness of the designation among those who would hire or train CPAs.

Expansion of Training Opportunities The new CPA certification program includes two training routes—the pre-approved program route and the experience verification route—for gaining practical experience that meets the requirements and standards of the profession. Pre-approved program positions are offered by offices/organizations that have progressive career paths established to meet the experience requirements of the CPA program and are approved by the profession. The experience verification route is student driven, with the student ensuring they are getting the needed progressive experience, working with a CPA mentor approved by the profession.

Information sessions were held to educate employers and students regarding the training pathways for the CPA program.

Key Accomplishments in BC

With proclamation of our CPA Act on June 24, 2015, the remaining operational activities and functional areas were integrated.

CPABC protects the public, educates students, and provides services and support to members. Aligned with the national collaboration, these accomplishments will be presented in the four core areas of focus of the profession.

Public Trust and Ethics Protection of the public interest is an ongoing priority for CPABC, and according to our members it’s one of the most important services CPABC provides as a governing and training body.

Under the provisions of the CPA Act there are new provisions that provide additional protection to the public. No person, other than an authorized CPA member, may issue any form of certification, declaration, or opinion with respect to information related to a financial statement or any part of a financial statement, on application of:

• Financial reporting standards published by the Chartered Professional Accountants of Canada; or

• Specified auditing procedures in accordance with standards published by the Chartered Professional Accountants of Canada.

This ensures that the public receives assurance services under the CPA Canada Handbook Standards only from regulated accountants. Previous accounting Acts provided protection of the CA, CMA, and CGA designations but did not restrict the provision of services.

In addition, under the CPA Act only members of CPABC may call themselves “professional accountants.” This will add protection for the public and reduce confusion in the marketplace as non-members who may be unregulated are not able to hold themselves out as professional accountants.


Lastly, in situations where the member (or former member) is unable to continue to manage their practice, if needed, CPABC can apply to the court for an order appointing a custodian of the practice of a CPA to take possession of, or control over all, or part of the property of the accountant; and determine the status of, manage, arrange for the conduct of, and, if applicable, wind up or sell the practice of the accountant. This is a valuable tool to ensure the interests of the public are protected.

Continuing Professional Development (CPD) CPD plays an important function in enabling CPAs to develop and maintain professional competence that is relevant to their roles. Further, CPD is an important element in maintaining public confidence and trust in the services that are provided by our members.

Our CPD requirements are consistent with the International Federation of Accountants (IFAC) input based CPD standard of 120 hours every three years, with an annual minimum of 20 hours. In addition to these requirements, over the course of each three-year rolling reporting cycle, our members are required to ensure at least four of their reported verifiable hours relate to business ethics, reflecting and acknowledging the trend towards some prescribed CPD.

Active members are required to report compliance with CPD on a calendar year basis and virtually all members comply. Action is taken against members who do not comply with the requirements or the audit process. This action can result in suspension or cancellation of membership within the same calendar year as the reporting deadline. In 2016 the transition to reporting on a rolling year basis is in effect for all legacy members.

Regulation of the Practice of Public Accounting There are 3,465 practitioners and partners operating in 2,405 public practice offices in BC. The profile of these practices are similar to the profile of most BC businesses, the majority are small businesses where over 97% of the firms are owned by fewer than five professional accountants.

In addition, public practice offices include 19 CPA firms with more than ten partners and 31 CPA firms with five to nine partners. Those practicing public accounting must be registered or licensed with, and overseen by, CPABC.

As part of CPABC’s regulatory responsibilities, a program of practice reviews is carried out over a three-year cycle to ensure compliance with professional standards and to provide practitioners with guidance and education based on the results of the review.

This resulted in 816 practice reviews being conducted this past year. CPABC also communicated information on key practice areas through Public Practice News & Views in the monthly CPABC eNews, and provided support in the form of tools and resources. New CPABC categories of public practice licence have now been implemented.

Professional Conduct As a profession built upon integrity and public trust, CPABC investigates complaints about members and students. With over 34,100 members and over 5,200 students and candidates, it is a reflection of the integrity of the membership that there were only 89 complaints received in the year ended March 31, 2016.

Many complaints are dealt with through education and course work, and sometimes involve a fine. As prevention is the best course of action, guidance is provided to members in the magazine CPABC in Focus, and through ethics PD courses for students and members.

In rare instances, a discipline matter is serious enough to warrant a suspension, or cancellation of membership. Only three members had their membership cancelled as a result of disciplinary action.1

Nationally, the profession continues to refine a common regulatory framework reflecting compliance with international standards and best practices, including codes of conduct and practice inspection, disciplinary processes, and an effective, nationally consistent public accounting regime.

1 One of these individuals was a student.


Education and Qualification BC legacy students and candidates continued completing the legacy programs in near record numbers and as at year end, those who had outstanding academic requirements were transitioned into the CPA Professional Education Program (PEP) and the CPA Prerequisite Education Program (PREP) at the CPA Western School of Business (CPAWSB). The future growth of the profession is through having successful students, and in 2015/16, 1,860 members were admitted to membership by exam. BC also achieved a strong result with 331 writers successfully completing the first common final examination (CFE) for CPA PEP.

CPAWSB was formally established on April 1, 2015, and is tasked with managing the education programs for British Columbia, Alberta, Saskatchewan, and Manitoba. The school is delivering both the CPA Professional Education Program (PEP) and the CPA Prerequisite Education Program (PREP). CPAWSB has gone through significant growth this past year, with over 12,000 students in the legacy, PEP, and PREP programs as at December 31, 2015, compared to less than 6,000 one year earlier. The school has had some challenges due to the fast growth rate, but the student experience and success rates are good.

CPA Professional Education Program (PEP) The two year part-time CPA Professional Education Program (PEP) consists of six modules, and culminates in a national, multi-day final evaluation.

The modules use a blended learning model combining online learning, self-study, classroom learning, and teamwork to develop the competencies expected of Canada’s pre-eminent professional accountant. There is an evaluation after each module, which candidates must pass before proceeding to the next module.

Professional Program Candidates2

CGA PACE ICABC – CASB CMABC – ECMA CMABC – SLP PEP

0

1000

2000

3000

4000

5000

6000

2013/14 2014/15 2015/16

2 CGA PACE level candidates transitioned to CPAWSB in Q4; 953 CGA legacy students have not transitioned to the school and are completing outstanding practical experience and/or degree requirements.


CPA Advanced Certificate in Accounting and Finance (ACAF) The Advanced Certificate in Accounting and Finance (ACAF) program is a nationally recognized certificate issued by CPA Canada for those seeking a career in accounting and finance. It’s designed for college diploma holders, individuals currently employed in an accounting function without a recognized credential, internationally trained accountants wanting to work in Canada, and international students enrolled at a Canadian post-secondary institution who are seeking an additional Canadian credential that can be completed online. It was piloted in BC in May 2015 and launched in October 2015. CPABC is recruiting for and delivering the ACAF program in BC.

The certificate program enables students to upgrade their finance skills in order to enhance employment prospects. The full program can be completed in as little as one year, and prospects that receive advanced standing could be done in six months. The schedule can be flexible and based on a student’s needs, allowing them to complete it at their own pace. The certification is comprised of 10 online ACAF courses, ranging from six to eight weeks. Awareness of the program continues to build and enrollment is expected to increase in 2016-17.

Prerequisite Education (PREP) The CPA Prerequisite Education Program (CPA PREP) is an intensive accelerated bridging program designed for those who have an undergraduate degree in a discipline other than accounting and lack some or all of the prerequisite courses required for admission to CPA PEP.

Delivered on a part-time basis to offer students maximum flexibility and accessibility, CPA PREP modules are offered through distance or classroom learning. A modularized program, students complete only those modules they require.

Pre-requisite students

CGA Level 1–4 CMA Accelerated PREP

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500

1000

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2013/14 2014/15 2015/16


Growth and Recruitment Interest in the CPA profession continues to be strong. The Public Practice Fall Recruit events attracted over 2,000 students. Outreach to potential candidates and PREP students takes place in social media on Facebook, Twitter, and the recruitment blog; employer and member profiles were regularly posted to the recruitment and corporate blogs in order to promote careers in accounting, opportunities within the profession, and the benefits of training CPAs. The number of social media followers continues to grow at a steady rate.

Events with workforce recruits also increased, with a focus on career changers and new Canadians. Employer events figured prominently in recruitment efforts, as educational sessions were held with Career Connect Employers and firms providing information regarding the new certification programs and training pathways.

Brand and Reputation National accomplishmentsA nationally developed media campaign was launched in fall 2015 that included television, online ads, billboards, and print advertising.

Provincial accomplishmentsA provincial advertising strategy augmented national coverage with additional TV placements, billboards, online ads, social media, and radio. Online and radio coverage showcased CPA testimonials that focused on the attributes of the designation. These extra efforts paid off, as the most recent CPA Canada National Awareness Research found BC achieved a 41% advertising recall result for the CPA brand—the best in the country, as CPA Canada and the other provinces achieved 28%. Unaided awareness in BC was 26%, and again, was the best result in the country, with the national rate at 22%.

CPABC’s earned media strategy continued to successfully position members as business experts. Overall, the number of articles featuring BC members was on a par with the previous year’s results, as were the ad value and circulation numbers. On average there were 3 articles about BC members every week, with the majority of articles centering on economic and professional commentary.

Government and stakeholder relations efforts focused on economic and provincial budget commentary through the BC Check-Up and Regional Check-Up and Budget recommendations, and partnering with the Vancouver Board of Trade, BC Chamber of Commerce, Business Council of BC, and Business in Vancouver on several high profile events. For many of these events CPABC received advertising benefits, editorial, and event input.

Recruitment

Information session attendance Information kits requested

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2013/14 2014/15 2015/16

GROWTH

MARKET

The right fit for business.

CPApro.ca

Contemplating global expansion? Trust the expertise of Chartered Professional Accountants. They have the proven business acumen to help you accelerate your growth in new markets.

Canada’s accounting designations are now unified into one new single profession. There are more than 200,000 top Canadian CPAs recognized and respected throughout the world.

STRATEGY

VISION

The right fit for business.

Surrounding yourself with the top talent is always a wise strategy. Chartered Professional Accountants have the insight to see the big picture and the business know-how to help you realize your organization’s vision and goals.

Canada’s accounting designations are now unified into one new single profession. There are more than 200,000 top Canadian CPAs recognized and respected throughout the world.

CPApro.ca


Member Engagement CPABC supports members by providing education, services and resources, and networking opportunities.

Professional Development The PD program provides professional development opportunities and products to meet the constantly evolving PD needs of our membership. In 2015/16, PD held 825 face-to-face courses. Comparative analysis of pricing with other provincial accounting bodies and education providers found CPABC prices competitive allowing the PD program to deliver excellent value for members.

PD titles relevant to members in industry were expanded, and in addition to the executive leadership courses, included titles in financial reporting, management, and tax. In total, over 24,000 participants attended PD courses. There were 16 free PD sessions held, with 2,429 member registrations; these sessions focused on educating members on the new CPABC regulatory regime and included topics on managing operational risks, taxation, the economy, and governance guidance for Not For Profit Directors.

40%

28%

19%

10% 3%

Distribution of 825

PD Courses held in 2015/16

Management Accounting & Auditing Taxation Ethics Student courses

40%

29%

22%

6% 3%

Management Accounting & Auditing Taxation Ethics Student courses

Distribution of 782

PD Courses held in 2014/15

CPA Connect Event with BCIT’s School of Business April 8, 2015. Photos by Aaron Aubrey Photography.


Richard Rees, FCPA, FCA, CPABC’s president & CEO, tells the crowd: “This is shaping up to be a historic year, and events like [this] are an integral part of how we can build new and important traditions for all CPAs in BC.”

It was a full house for the “United CPA: Why it’s good for business” panel discussion, which was moderated by David Crawford, CPA, CMA, VP of the Vancouver Board of Trade, and featured Advanced Education Minister Andrew Wilkinson; CPABC President & CEO Richard Rees, FCPA, FCA; Lori Mathison, CPA, CGA, managing partner of Dentons Canada LLP; and Mary Anne Davidson, director of the Vancouver Board of Trade.Photos of the CPABC all-members meeting and CPABC/

VBOT luncheon by Tyson Dziedzic .

Andrew Wilkinson (front row, centre) poses for a shot with CPABC’s inaugural board. Photos of the CPABC board with the advanced education minister

by Kent Kallberg Studios.

Olin Anton, FCPA, FCA (left), presents the minister with a CPA plaque on behalf of the CPABC board.

Spring Leadership Conference, May 7 – 8, 2015 Photos by Alistair Eagle for Ron Sangha Productions.

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Fall Recruit Photo of the two-day recruiting event in Vancouver by Erich Saide Photography.


Member Engagement TourPhoto of Victoria MET stop by John Yanyshyn of Visions West Photography.

Update on Financial LiteracyPhotos of Surrey and Vancouver MET stops, respectively, by Jay Shaw Photography.

Fall Pacific Summit in Kelowna

Delegates at various Summit events, including the trade show.Photos by Glen Durrell Photography.

Member Recognition DinnerCPABC’s inaugural award winners and fellows (from left to right) – Standing: Praveen Varshney, FCPA, FCA; Bert Miles, FCPA, FCMA; Selena Nisbet, CPA, CGA (Early Achievement); Kay Gray, FCPA, FCGA; Craig Carefoot, CPA, CMA (Early Achievement); Jacqueline Oi Ping Ho, CPA, CGA (Service to the Profession); Sharon Perry, CPA, CA (Early Achievement); Peter Guo, CPA, CA (Community Service); Gord Cummings, FCPA, FCA, CPA (Illinois); Lori Mathison, FCPA, FCGA, LLB; Lorne Calder, FCPA, FCMA; Saskia Muller, CPA, CGA (Early Achievement); and Aaron Collins, CPA, CGA (Service to the Profession). Seated: Paul Hamilton, FCPA, FCA; Janice Roper, FCPA, FCA; C.Y. Tay, FCPA, FCGA; Gayle Gorrill, FCPA, FCA; Russ Wilson, CPA, CA (Service to the Profession); Carol Bellringer, FCPA, FCA; and David Turchen, CPA, CA, CPA (Washington) (Community Service). Not in attendance: Lauren Clavora, CPA, CA (Early Achievement); Jason Stevenson, CPA, CMA (Service to the Profession); and Henry Tso, CPA, CGA, CMA (Early Achievement).Photo by Kent Kallberg Studios.

L to R: Tim Manning, ICD.D, chair, Greater Vancouver Board of Trade and regional VP, commercial financial services, RBC Royal Bank; Richard Rees, FCPA, FCA, president & CEO, CPABC; Michael Porter, Ph.D., Bishop William Lawrence university professor, the Institute for Strategy and Competitiveness, Harvard Business School; and Iain Black, president & CEO, Greater Vancouver Board of Trade. Photo by Sara Borck Photography.

2016 Business Case CompetitionMembers of UBC Okanagan's three participating teams—Team BAM, Team LAD Consulting, and Team ROOKS—take a moment to pose for a group shot.


This is just a sampling of some of the member services and tools available — the CPABC website is the hub for member engagement and services, and CPABC is working to inform members of the breadth of services now available.

Our goal is to reach as many members as possible, and we continually evaluate our tools for effectiveness and reach and include:

• CPABC in Focus, which is produced six times annually, and delivered either electronically or in hard copy; 77% of members indicated they had read the magazine within the last six months.3

• CPABC eNews, the monthly e-newsletter providing information on breaking news, events, PD, and standards changes; 67% of members read eNews within the last six months.4

• Industry Update, the quarterly e-magazine for members in industry; 33% of members had read this publication within the last six months.5

• CPABC social media sites (Facebook, Twitter, YouTube, Flickr, and LinkedIn) and blog, which saw cumulative growth of 36% year over year.

• The CPABC website averaged over 42,000 unique visitors each month, a 101% increase from the previous year.6

• Overall, 74% of members who responded to the members’ survey rated the communications from CPABC positively, and CPABC will continue to use member feedback to make improvements.

Member Support and Engagement A diverse membership requires a wide-range of tools and services to provide support and connect members to the profession. A sampling of the member support tools includes:

• CPABC chapters continue to evolve. All 15 chapters held at least two events each, many as part of the Member Engagement Tour. Overall, these chapters held 90 social networking events with over 3,600 registrations and 118 local PD courses attracting over 7,800 registrations, and kept their members informed through blogs and social media.

• The Member Engagement Tour held 21 sessions and provided an opportunity for over 1,600 members to meet with the leadership and discuss what’s happening in the profession, particularly with respect to the regulatory transition.

• Member forums and networking events bring together groups of members with similar backgrounds and/or areas of interest, providing opportunities to network, discuss common issues, and brainstorm solutions to common concerns in a collaborative environment. Three new member forums were added to serve practitioners outside Vancouver.

• Over 3,100 telephone enquiries were handled by Professional Advisors, covering topics ranging from public enquiries about the merits of hiring a professional accountant to member enquiries about technical and ethical issues related to the new Code. In addition, a host of online resources are available.

• All members can access benefit programs, such as an Employee and Family Assistance Program and numerous national and provincial discounts and benefits.

• The CPABC Careers site is an online career search tool for CPAs that matches the staffing needs of employers to the talents and experience of CPABC’s designated members, students, and candidates. Last year, 104,000 unique visitors came to the site and there were 18,900 average monthly logins by CPA members, students, and candidates.

3 Results are based on the 2015 CPABC Members’ Survey.4 Ibid.5 Ibid.6 Statistics represent CPABC’s corporate website only

and compares a seven month time period (September 9 – March 31 for both fiscal years) instead of the usual twelve month period, as the new CPABC site went live on September 9, 2014.


Financial Performance CPABC Operations for the year ended March 31, 2016 CPABC Operations for the year ended March 31, 2016, with comparatives for the prior year.

All in $000’s

2016 2015

RevenuesMembership Dues $ 14,108 $ 13,206Professional Development 7,686 6,380Student Education Program: Legacy Program Run-out 5,733 13,993 CPA Prerequisite Program 1,017 1,665Regulatory Affairs: Public Practice Fees 2,866 2,814 Discipline Fines and Cost Recoveries 216 169 Admission Fees 885 631Member Services and Event Revenue 891 883Investment Income (Note 3) 391 402Employment referral services 315 297CPA Western School of Business cost recoveries (Note 10) 273 264Other Revenue 482 691 $ 34,863 $ 41,395

ExpensesProfessional Development $ 6,321 $ 6,082Student Education Program 5,157 11,269Regulatory Affairs Public Practice Registration & Review 2,194 2,212 All Other Regulatory Affairs 3,581 2,343Member Services and Engagement 2,574 2,741Communications, Business Development & Recruiting, External Affairs 6,430 7,120Governance & Executive Office 1,907 2,808Administration Support 6,559 6,568Information Technology 1,635 1,446 $ 36,358 $ 42,589

(Deficiency) Excess of revenues over expenses before gain on sale of land and building $ (1,495 ) $ (1,194 )Gain on sale of land and building – 11,337

(Deficiency) Excess of Revenues over Expenses $ (1,495 ) $ 10,143


Revenues Total revenue in 2015/16 for the CPABC profession was $34,863,000, vs $41,395,000 in 2014/15 (excluding the sale of building and land from CGA BC).

The most significant variance results from the wind up of the legacy education programs, which offset the increase in professional development revenue and membership dues.

The primary sources of funding for the profession’s programs and services are membership dues, student education programs, professional development revenue, and public practice firm fees.

Primary sources of funding

FY 2015/16 Revenue FY 2014/15 Revenue

MembershipFees

Professional Development

Student Education Program

Public Practice & Regulatory Recoveries

All Other Revenue

Gain on sale of building

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000


41%

22%

19%

11%7%

2015/16Revenue

Membership fees Professional Development Student Education Program Public Practice & Regulatory recoveries All other revenue

Membership fees Professional Development Student Education Program Public Practice & Regulatory recoveries All other revenue

32%

15%38%

9%6%

2014/15Revenue

Membership fees revenue was the most significant activity, and accounted for 41% of the profession’s revenues in 2015/16 and 32% in 2014/15.

Professional development was the second largest source of revenue with 22% of the profession’s revenues in 2015/16 and 15% the previous year.

Historically the first source of funding, the student education program revenue was the third largest source of revenue and accounted for 19% of the profession’s total combined revenues in 2015/16 and 38% in 2014/15. These net revenues have been impacted as education delivery shifted from the legacy bodies to CPAWSB.

Professional DevelopmentChoices

2016

SPRING I SUMMER


Expenditures The total expenditures in 2016/15 for CPABC were $36,358,000, vs $42,589,000 in 2014/15.

Expenditures in 2015/16 have decreased in comparison to the 2014/15 amounts for most areas, showing the trend for increasing operational efficiencies, with some increases in regulatory affairs and administration support relating to activities such as new governing documentation for CPABC, the issuance of over 34,000 new CPABC certificates and integration activities to implement unification.

CPABC’s financial resources were invested in the following programs and services: student education programs; governance; member services and engagement; communications, business development, recruiting, and external affairs; regulatory affairs; professional development; and administration support and IT.

Program investments

FY 2015/16 Expenses FY 2014/15 Expenses

Governance & Executive Office

Regulatory Affairs

Student Education Program

Communications, Business Development

& Recruiting, External Affairs

Professional Development

Member Services & Engagement

Administration Support & IT

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000


16%

14%

5%

18%17%

7%

23%

2015/16Expenditures

Governance & Executive Office Regulatory Affairs Student Education Program Communications, Business Development

& Recruiting, External Affairs Professional Development Member Services & Engagement Administrative Support & IT

11%

26%

7%

17%

14%

6%

19%

2014/15Expenditures

Governance & Executive Office Regulatory Affairs Student Education Program Communications, Business Development

& Recruiting, External Affairs Professional Development Member Services & Engagement Administrative Support & IT

The Environment in which CPABC operates

Strategic Risks and Risk Management CPABC regularly identifies and assesses risks to ensure they are effectively managed. The rapidly changing environment in which it operates creates several risks and uncertainties that could affect the successful implementation of the operational and strategic plans outlined above.

Regulatory Under the Chartered Professional Accountants Act, CPABC’s regulatory responsibilities include: maintaining admission, licensing, and mandatory continuing education requirements; conducting reviews of public accounting firms; investigating complaints; and disciplining members, firms, and students.

Our vigilance with regard to these regulatory responsibilities, combined with the involvement of volunteers (members and public representatives), ensures that our members and students meet standards as expected by both the public and regulators.

As we move through the transition to a new profession across Canada, CPABC strives to harmonize its regulations to the extent possible with those of other provincial CPA bodies, and BC has provided extensive input and ensured that our members’ needs and viewpoints were represented through the national harmonization process.


This harmonization enhances our profession’s ability to meet the requirements of the Agreement on Internal Trade, a Canadian intergovernmental trade agreement designed to ensure labour mobility (among other things).

Provincially, self-regulating professions often need to be more accountable and transparent with regard to their regulatory processes, while also balancing the potential consequences for a member/firm’s reputation, business, or professional status. Therefore, when establishing policies, considering procedural changes, or responding to requests for information, CPABC carefully balances the public’s interest in transparent regulation and disclosure with members’ rights to privacy. As part of this commitment, CPABC publishes an annual ‘Report to the Public’ providing details of our approach to protecting the public interest.

The Canadian Public Accountability Board (CPAB) is a regulatory regime with significant influence on public company auditors. CPABC continues to work with CPAB to minimize the potential for expensive, inconvenient, and confusing duplication and inconsistency in the oversight of public company auditors who are regulated by both CPAB and CPABC.

Funding and Financial Currently revenues are derived primarily from three sources:

• Member dues, which account for 41% of CPABC’s total revenue, fund many critical programs. With many members close to retirement, increasing both membership numbers and member satisfaction will ensure a robust membership body; thus both are key initiatives in the national strategy.

• The professional development program which offers courses to members and the public, currently accounts for 22% of the total revenue of CPABC. CPABC ensures a sustainable PD program by continuing to provide competitive and relevant learning opportunities to both members and the public.

• Student education revenues account for 19% of the total revenue of CPABC this past year. As education delivery has shifted to the CPAWSB in September 2015, this stream of revenue has significantly decreased.

The introduction of new continuing education and member services programs comes with inherent financial risks. In terms of PD, for example, uncertain participation rates and the potential for competition from other providers present financial risks when new courses are introduced.

CPABC manages these risks by collaborating with other CPA or unifying bodies, conducting advanced market research and pilot offerings, and targeting its marketing. These strategies will continue as the profession invests in future courses and products.

As part of its role in a self-regulating profession, CPABC is responsible for disciplining members. Dealing with the complexities of each individual case—as well as the unpredictable cost of legal and investigative fees—presents uncertainties in terms of time, effort, and resources.

As CPABC has no control over these variables, it monitors discipline costs and maintains sufficient unrestricted net assets to ensure that adequate resources are available to manage this variability.

Human Resources CPABC relies on the services of volunteers to complete many of its planned projects and regulatory responsibilities. The talent and expertise of volunteers are among its most valuable resources.

Many national working groups that are shaping the new CPA profession, setting its strategic direction, and finalizing the details of the new CPA certification programs have benefited from this expertise and commitment.

There is always some risk that volunteers may not be as willing or able to donate their time or talents in the future, due to ever-increasing competition for their attention. This means that CPABC could eventually incur a significant cost in trying to replace lost expertise. To mitigate this risk, CPABC continues to nurture ongoing volunteerism by ensuring positive and rewarding experiences for volunteers, and by structuring volunteer opportunities in a flexible manner.


Given the uncertainty inherent in establishing a new organization, and the stresses that come with it, staff retention could be challenging. To manage the risk of employee turnover, CPABC has implemented a number of change management strategies. In addition, CPABC offers a high-quality work environment with a total compensation package that is competitive with the professional, not-for-profit market for the skills employed.

Education Changes made to the education and qualification system, such as the evolution to the new CPA certification program, are made with the intention of increasing the profession’s growth while maintaining its excellent reputation.

There is a risk that the new CPA Certification Program will not be as well accepted in the marketplace and as attractive to potential students. The profession’s leadership is closely monitoring the development and implementation of the new program, and is ensuring the program evolves to meet or exceed the standards for legacy program admission and delivery policies, and that it is accepted in the marketplace by both business and candidates/students.

There is also a risk that certain legacy mutual recognition agreements may not be renewed with existing provisions due to the newness of the CPA program.

Standards While it is vital to the CPA brand that designated accountants stay abreast of emerging accounting and assurance standards, the profession’s leadership across Canada recognizes that the increasing complexity and volume of these standards requires members to put in a significant effort in terms of change management.

Therefore, in partnership with CPA Canada and the other provincial CPA or unifying bodies, CPABC continues to provide tools and support to help members working in industry, public practice, and other sectors, as well as those serving on boards and audit committees to maintain the quality of their work.

CPABC continues to monitor the quality of the work performed by public practitioners through practice review—in part to help members in public practice deal with the increased complexity of the standards.

Financial Risks and Risk Management As part of its strategic planning process and through the execution of its strategic initiatives, CPABC regularly identifies and assesses risks to ensure they are effectively managed. Since the organization operates in an extremely complex and rapidly changing global environment, it must pursue opportunities, provide services, and conduct activities, which may carry with them a certain degree of risk, in order to accomplish its mission.

CPABC assesses its willingness to accept risk and determine its overall risk tolerance profile by evaluating risks for their potential severity of impact and the likelihood of their occurrence, before any mitigation strategies are introduced.

In the normal course of business, CPABC is exposed to financial risks, such as those related to credit, liquidity, and market, that have the potential to adversely affect operating and financial performance. For an explanation of CPABC’s exposure to the risks associated with its financial instruments, refer to the notes to the individual audited financial statements for the year ended March 31, 2016.


Cash and Investments

March 31, 2016 March 31, 2015

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Cash and Investments

Capability to Deliver Results During 2015/16, the three bodies received cash flows from operating activities of $2,989,000, while cash flows of $2,306,000 were used in investing and financing activities.

At March 31, 2016, cash and investments available to the organization total $33,524,000 (2015 - $34,767,000).

The primary objective of the overall investments is preservation of capital, with secondary objectives of maximizing return on investments, providing sufficient liquidity to allow the organization to meet its changing cash requirements, and cash flow generation.

The goal is to achieve an annual return which exceeds a benchmark based on the asset allocation weighting.

CPABC believes its current cash and short-term investments, combined with the anticipated cash flow from operations, are sufficient to meet the working capital and capital expenditure requirements for the foreseeable future.

In 2015/16, the total capital expenditures net of lease inducements was $2,245,000 of which $872,000 related to the CPABC member database.

Net Assets The net assets available at March 31, 2016 are as follows:

March 31, 2016 March 31, 2015

Total unrestricted net assets $ 7,554 $ 5,054Invested tangible & intangible assets 3,119 1,539Capital development fund 67 2,312Unification stabilization fund 670 4,000Strategic opportunity fund 6,500 6,500Total Net Assets $ 17,910 $ 19,405


Total Net Assets

March 31, 2016 March 31, 2015

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Total NetAssets

The decrease in the total Net Assets reflects the significant unification activities which occurred in 2015/16. In fiscal 2014/15, the respective Boards and Council of the legacy bodies internally restricted funds amounting to $12,812,000 for the Capital Development Fund ($2,312,000) for the development of new IT platform for CPABC and build out and furnishing of the new leased premises, Unification Stabilization Fund ($4,000,000) for non-recurring costs of unification, and Strategic Opportunity Fund ($6,500,000) for projects benefiting the profession and its members and students.

In fiscal 2015/16, CPABC has moved into new premises on August 1, 2015 and the development work of a new IT platform has been completed. The Capital development Fund has been substantially utilized and the remaining amount is now available for short term investments.

CPABC incurred significant non recurring unification costs of $3,330,000, drawing down on the Unification Stabilization fund.

The Board and management believe the net assets of the profession are sufficient to:

a) Provide the financial capital needed to meet any unexpected financial risks CPABC may encounter in the near future, and

b) Maintain reasonable stability in the annual membership dues payable by members.

Systems and Processes CPABC maintains robust internal accounting and administrative control systems that are consistent with reasonable cost, and meet the requirements of regulation such as the Freedom of Information and Privacy legislation.

Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable, and accurate, and that CPABC’s assets are appropriately accounted for and adequately safeguarded.


While CPABC believes there are no mission-critical systems, controls, procedures, or deficiencies that will impair its ability to provide reliable and timely disclosure, or affect its ability to execute the strategic and operational plans, integrating three systems into one continues to require a significant investment.

Key Performance Drivers As CPABC operates in the not-for-profit sector, several non-financial indicators are used to measure performance, and these play a significant role in what drives the organization.

At the same time, CPABC also has a stewardship responsibility to its members, and relies on financial indicators to ensure that the resources entrusted to the organization are used efficiently and appropriately.

The primary indicators of success in achieving the mission, strategy, and priority commitments are deliverables, stakeholder satisfaction, and financial performance.

Deliverables CPABC regularly reviewed deliverables through various reporting processes to the board to ensure ongoing alignment with:

a) The organization’s regulatory mandate; b) The needs of BC members; and c) The goal of attracting and educating exceptional

people for the accounting profession.

Deliverables were identified and are expected to be completed on time, within budget, and at the highest level of quality possible.

The extent to which CPABC achieves these goals is one of its most important measures of success.

Stakeholder Satisfaction CPABC’s external stakeholders include the government, the securities industry, other regulators, and the users of our members’ services.

Nationally, the profession conducts periodic surveys of its external stakeholders to gain insight into how designated accountants are perceived. BC also monitors public satisfaction through periodic meetings with regulators and government officials, and by monitoring the coverage of designated accountants in the provincial news media.

CPABC’s members are its internal stakeholders. Member satisfaction with the services provided is a critical performance indicator.

Accordingly, programs and services are evaluated, modified, and developed based on members’ feedback regarding their needs and satisfaction with existing services. Members provide feedback through member consultations and surveys.

Another performance indicator is the number of repeat professional development (PD) registrations, as the CPABC PD program competes in the marketplace with other education service providers. Feedback is sought after each PD course to ensure quality education and to garner ideas for new courses.

Member Satisfaction Understanding the needs of members, and providing the products and services to fill these needs, is the fundamental purpose of CPABC’s programs. A crucial way to evaluate the success of our various programs is by listening to what members have to say. Feedback is sought by engaging with members directly, conducting independent membership surveys, holding focus groups, soliciting feedback, and monitoring usage. The results from these various communication channels help us to enhance programs and services.


Outlook for 2016/17 In fiscal 2015/16, the unification of the accounting profession under the CPA banner was largely completed, with CPA legislation in place for the majority of the country.

Nationally, BC will continue actively participating on committees that will deliver on the strategy for the profession in Canada, and continue building BC’s strategy within the collaborative strategic framework. In addition, with an environment of increasing public and regulatory scrutiny, the protection of public trust will be front and center for the profession.

Provincially, while our three legacy bodies have amalgamated there are still considerable transitional activities taking place in many functional areas. Transitional activities don’t just entail winding down the legacy organizations, but also include developing new CPA processes and programs at both the national and provincial level, and this will take additional time.

One area where this is especially true is education delivery. The CPA Western School of Business (CPAWSB) has only been fully operational for a year and has assumed delivery of CPA PREP in addition to PEP, with the last legacy program only winding down in September – a mere seven months ago. Meanwhile the national CPA programs continue to evolve. CPABC is determining the funding structure, operational processes, and responsibilities of the school with the other western provinces and CPAWSB. The school is still gearing up from a staffing and process perspective, and fine-tuning education delivery while doubling in student enrollment. It’s an exciting time, but the work will continue for the foreseeable future.

That said, we expect that as we work towards a steady state for CPABC and CPA Canada, economies of scale will be realized. BC is in good shape and leading the country in change management.

CPABC is already a solid, stable organization that is well positioned to meet its member needs and legislative responsibilities. We are focused on the future and working towards maximizing our efficiency and effectiveness.

Education at the forefront The main theme of the coming year ahead is education. CPABC will work with our education provider, CPAWSB, to ensure that the CPA student experience is seamless, rewarding, and positive from recruitment to membership, and that the profession’s exceptional training programs continue to attract and retain quality candidates, with a particular emphasis on building up the Advanced Certificate in Accounting and Finance program.

We will continue to educate employers and prospects and build awareness of the brand in the marketplace so that the spectrum of CPA education programs are known, the benefits and opportunities are well understood, and the profession is able to meet the needs of the market.

Our communications and members’ services will educate and support members, assisting them as they navigate through the myriad of standards and regulatory changes with the new CPABC regime coming into full force.

We will grow and learn as an organization as we better understand how to serve a more diverse and ever-changing membership, ensuring we are equipped to strategically support BC’s economic and business needs, and maintain the highest of ethical and leadership standards.

Olin Anton, FCPA, FCAChair

Brian Friedrich, FCPA, FCGAExec Committee Member at Large

Roland KruegerPublic Representative

Stanley Chang, CPA, CGAMember

C. Douglas Lang, CPA, CGAMember

Geoffrey Dodds, CPA, CAMember

Sheila Nelson, CPA, CAMember

Ben Sander, FCPA, FCAMember

David Hallinan, FCPA, FCMAFirst Vice-Chair

2015-2016 Board of Directors

Heather Banham, FCPA, FCGASecond Vice-Chair

Barry Macdonald, FCPA, FCATreasurer

Lindalee Brougham, FCPA, FCA, CGA Member

Barbara Brink, CPA (Hon.)Public Representative

Doris Good, CPA, CMAMember

Elizabeth JacksonPublic Representative

Diane Kerley, FCPA, FCMAMember

Tom Senft, CPA, CGAMember

Gavin Still, CPA, CGAMember

CPABC’s


Governance and Leadership CPABC is governed by a board comprised of three non-accounting profession public representatives appointed by the provincial government, and 15 CPAs. The inaugural board is comprised of individuals who previously served on the boards of the Institute of Chartered Accountants of BC, the Certified Management Accountants Society of BC, and the Certified General Accountants Association of BC. Board elections will commence at the 2017 Annual General Meeting.

At the governance level, the national CPA Collaboration Accord governs how the independent national body, CPA Canada, and independent CPA provincial bodies work together. It details the ways in which these parties will collaborate, cooperate, and partner in order to further the CPA profession and harmonize approaches (where appropriate) to common core elements and key functions. Given this level of collaboration, CPABC staff and volunteers have taken on key roles to ensure that BC is influencing the national direction.

Financial Statements

Financial Reporting Framework CPABC previously adopted the Accounting Standards for Not-for-Profit Organizations contained in Part III of the CPA Canada Handbook — Accounting.

Financial Statement Package CPABC has reported its first set of financial statements as a unified organization.

30 2015/16 CPABC Financial Statements

Financial Statements

Management responsibility for financial reporting The accompanying financial statements and all other information contained in this annual report are the responsibility of the management of the Chartered Professional Accountants of British Columbia (CPABC). The financial statements have been prepared by management in accordance with Canadian accounting standards for not-for-profit organizations and have been approved by the Board of Directors.

Preparation of financial information is an integral part of management’s broader responsibilities for the ongoing operations of CPABC. Management maintains a system of internal accounting controls to provide reasonable assurance that transactions are accurately recorded on a timely basis, are properly approved and result in reliable financial information. Such information also includes data based on management’s best estimates and judgments.

The Audit Committee reviews the annual financial statements and recommends them to the Board of Directors for its approval. In addition, the Audit Committee meets periodically with management and the external auditors, and reports to the Board of Directors thereon. The Audit Committee also reviews the annual report in its entirety.

The accompanying financial statements have been audited by the external auditors who are engaged by the Board of Directors on the recommendation of the Audit Committee and whose appointment was ratified at the annual meeting of members. The external auditors have access to the Audit Committee, without management present to discuss the results of their work.

Dated June 14, 2016

Richard Rees, FCPA, FCA President and Chief Executive Officer

Amy Y. Lam, FCPA, FCA Executive Vice President, Operations and Chief Financial Officer

2015/16 CPABC Financial Statements 31

Tel: 604 688 5421Fax: 604 688 5132 [email protected]

BDO Canada LLP600 Cathedral Place 925 West Georgia Street Vancouver BC V6C 3L2 Canada

Independent Auditor’s Report

To the Members of The Chartered Professional Accountants of British Columbia

We have audited the accompanying financial statements of the Chartered Professional Accountants of British Columbia, which comprise the Statement of Financial Position as at March 31, 2016, and the Statements of Operations, Changes in Net Assets and Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the 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 bymanagement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Chartered Professional Accountants of British Columbia as at March 31, 2016, and its results of operations, changes in net assets and cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Emphasis of Matter

We draw attention to Note 2 to the financial statements in which management of Chartered Professional Accountants of British Columbia describes and explains that combined comparative financial information is presented at March 31, 2015 and for the yearthen ended. This comparative financial information is presented by management in order to provide context to readers in understanding the merger transaction which occurred on June 24, 2015 to combine the assets and obligations of the Institute of Chartered Accountants of British Columbia, the Certified Management Accountants Society of British Columbia, and the Certified General Accountant Association of British Columbia. We were not engaged to report on the restated comparative information, and as such, it is unaudited.

Chartered Professional Accountants

Vancouver, British Columbia June 14, 2016


Statement of Financial PositionAs at March 31, 2016 (Note 2)

All in $000’s

2016 2015

ASSETSCurrent AssetsCash $ 8,547 $ 7,865Accounts receivable 470 1,717Short term investments (Note 3) 12,158 14,872Prepaid and other assets 679 945 21,854 25,399

Investments (Note 3) 12,819 12,030

Equipment and leaseholds (Note 4) 3,291 537Intangible assets (Note 5) 1,800 1,141 $ 39,764 $ 39,107

LIABILITIESCurrent LiabilitiesAccounts payable and accrued liabilities (Note 6) $ 7,087 $ 8,631Deferred revenue 12,796 10,932 19,883 19,563

Deferred Lease Inducements (Note 7) 1,971 139

NET ASSETS (Note 9)Invested in capital and intangible assets 3,119 1,539Internally restricted 7,237 12,812Unrestricted 7,554 5,054 17,910 19,405 $ 39,764 $ 39,107

The accompanying notes are an integral part of these financial statements.

On behalf of the Board.

Olin Anton, FCPA, FCA Chair of the Board

Barry Macdonald, FCPA, FCA Treasurer


Statement of OperationsFor the year ended March 31, 2016 (Note 2)

All in $000’s

2016 2015

RevenuesMembership Dues $ 14,108 $ 13,206Professional Development 7,686 6,380Student Education Program: Legacy Program Run-out 5,733 13,993 CPA Prerequisite Program 1,017 1,665Regulatory Affairs: Public Practice Fees 2,866 2,814 Discipline Fines and Cost Recoveries 216 169 Admission Fees 885 631Member Services and Event Revenue 891 883Investment Income (Note 3) 391 402Employment referral services 315 297CPA Western School of Business cost recoveries (Note 10) 273 264Other Revenue 482 691 $ 34,863 $ 41,395

ExpensesProfessional Development $ 6,321 $ 6,082Student Education Program 5,157 11,269Regulatory Affairs Public Practice Registration & Review 2,194 2,212 All Other Regulatory Affairs 3,581 2,343Member Services and Engagement 2,574 2,741Communications, Business Development & Recruiting, External Affairs 6,430 7,120Governance & Executive Office 1,907 2,808Administration Support 6,559 6,568Information Technology 1,635 1,446 $ 36,358 $ 42,589

(Deficiency) Excess of revenues over expenses before gain on sale of land and building $ (1,495 ) $ (1,194 )Gain on sale of land and building – 11,337

(Deficiency) Excess of Revenues over Expenses $ (1,495 ) $ 10,143


Statement of Changes in Net AssetsFor the year ended March 31, 2016 (Note 2)

All in $000’s

Invested in Invested in Capital and Capital and Intangible Internally Intangible Internally Assets Restricted Unrestricted 2016 Assets Restricted Unrestricted 2015

Balance, beginning of year $ 1,539 $ 12,812 $ 5,054 $ 19,405 $ 6,107 $ – $ 3,155 $ 9,262Excess (Deficiency) of expenses over revenues – – (1,495 ) (1,495 ) – – 10,143 10,143Gains on sale of land and building – – – – – 11,337 (11,337 ) –Disposition of tangible capital assets – – – – (4,793 ) – 4,793 –Investment in equipment and leaseholds, net of deferred lease inducement 1,252 (1,252 ) – – 160 – (160 ) –Investment in intangible assets 993 (993 ) – – 942 – (942 ) –Amortization of deferred lease inducements 103 – (103 ) – 32 – (32 ) –Amortization of intangible assets (337 ) – 337 – (424 ) – 424 –Amortization of equipment and leaseholds (431 ) – 431 – (485 ) – 485 –Interfund transfers (Note 9) – (3,330 ) 3,330 – – 1,475 (1,475 ) –Balance, end of year $ 3,119 $ 7,237 $ 7,554 $ 17,910 $ 1,539 $ 12,812 $ 5,054 $ 19,405



Statement of Cash FlowsFor the year ended March 31, 2016 (Note 2)

All in $000’s

2016 2015

OPERATING ACTIVITIES(Deficiency) Excess of revenues over expenses $ (1,495 ) $ 10,143Adjustments to determine net cash provided by (used in) operating activitiesAmortization of equipment and leaseholds 431 485Amortization of intangible assets 337 424Gain on sale of land and building – (11,337 )Unrealized loss/(gain) on investments 52 (124 )Write–off of deferred rent – (176 )Amortization of deferred lease inducements (103 ) (32 ) $ (778 ) $ (617 )

Change in non–cash working capital itemsAccounts receivable $ 1,247 $ (1,146 )Prepaid and other assets 265 120Accounts payable and accrued liabilities (1,544 ) 4,858Deferred lease inducements 1,935 –Deferred revenue 1,864 2,490 $ 2,989 $ 5,705

INVESTING ACTIVITIESPurchase of investments $ (16,294 ) $ (17,209 )Proceeds on sale of investments 18,168 –Purchase of equipment and leaseholds (3,187 ) (160 )Purchase of intangible assets (993 ) (942 )Proceeds on sale of land and building – 16,125 $ (2,306 ) $ (2,186 )

Net change in cash $ 682 $ 3,519

Cash, beginning of year $ 7,865 $ 4,346Cash, end of year $ 8,547 $ 7,865


Notes to Financial Statements March 31, 2016


All in $000’s

Purpose On June 24, 2015, the Chartered Professional Accountants of British Columbia (CPABC) was legally established under the Chartered Professional Accountants Act. The CPABC is a member organization of the Chartered Professional Accountants of Canada (CPA Canada). The CPABC is a tax-exempt body under Section 149 of the Income Tax Act.

CPABC has the following objectives as outlined in the Chartered Professional Accountants Act:

1. to promote and maintain the knowledge, skill and proficiency of members and students in the practice of accounting;

2. to establish qualifications and requirements for admission as a member and continuation of membership, and for enrollment and continuation of enrollment of students;

3. to regulate all matters, including competency, fitness and professional conduct, relating to the practice of accounting by members, students, professional accounting corporations and registered firms;

4. to establish and enforce professional standards; and,

5. to represent the interests of members and students.

1. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting

These financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations.

b) Revenue Recognition

Membership dues, membership admission fees, magazine advertising, and other revenue are recognized as revenue in the year in which they apply. Waivers of membership dues for retired members and for members who are out of the workforce caring for dependants are self-assessed.

Public practice fees are recognised as revenue in the year in which they apply and the amount collected are allocated proportionately over 12 months commencing September 1, and the portion not yet taken into income is recorded as deferred revenue.

Professional development revenue is recognized when the course is presented. The liability for the portion of course revenues invoiced but not yet presented is recorded as deferred revenue.

Program and students education revenue is recognized as revenue over the term of the program.

Discipline fines and cost recoveries are recognized when their collection is assured and all of the CPABC’s internal processes and any known external appeals are complete.

Investment income includes interest income and realized and unrealized gains and losses.

Other revenue is recognized on an accrual basis.



All in $000’s c) 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 the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant areas requiring management estimates and assumptions include the useful lives of equipment and leaseholds and intangible assets for calculating amortization, the determination of the deferred portion of Professional Development (PD) fees, provision for loss relating to subleasing existing lease, and the allocation of expenses to the appropriate functional category and contingencies.

d) Investments

Investments are initially recognized and subsequently measured at fair value plus accrued interest, determined using market information. Transaction costs and net gains and losses arising from changes in fair value are immediately recognized.

e) Equipment, Leaseholds and Intangible Assets

Equipment and leaseholds are recorded at cost. Amortization is calculated on a straight-line basis over the expected useful lives of the assets as follows:

Leasehold improvements remaining term of lease Office furnishings ten years Computer equipment and software three years Printing equipment six years

Donated assets are recorded at fair value when such value can be reliably estimated.

f) Intangible Assets

Intangible assets, consisting of the development costs related to the CPABC Member database are measured at cost less accumulated amortization and, if applicable, accumulated impairment losses. Amortization is provided on a straight-line basis over the estimated useful life of 10 years.

Equipment, Leaseholds and Intangible Assets are tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If any potential impairment is identified, then the amount of the impairment is quantified by comparing the carrying value of the equipment, leaseholds, or intangible asset to its fair value. Any impairment of these assets is charged to income in the period in which the impairment is determined.

An impairment loss is not reversed if the fair value of the equipment, leaseholds or intangible asset subsequently increases.

g) Lease Inducements

CPABC accounts for lease inducements received by deferring such amounts and amortizing them to income on a straight-line basis over the term of the lease.



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h) Controlled Entities

Controlled entities are not-for-profit entities and are not consolidated in CPABC’s financial statements as the bylaws and trust agreements of the entities specify that entities’ assets are to be used for specific purposes only, and are not available to the CPABC even in the event of the entity’s dissolution. The CPABC believes separate note disclosure of controlled entities provides a more meaningful presentation of the CPABC’s activities.

i) Allowance for doubtful accounts

Accounts receivable are reviewed on a monthly basis and are written off when it is determined that the likelihood of collection is low.

j) Donated Services

CPABC and its members benefit greatly from donated services in the form of volunteer time for various activities. The value of donated services is not recognized in these financial statements.

2. UNIFYING THE ACCOUNTING PROFESSION

Since 2012, the professional accounting bodies across Canada, including British Columbia, have been working towards unification under the Chartered Professional Accountant (CPA) designation. In British Columbia, the bodies involved in unifying the accounting profession were:

• The Institute of Chartered Accountants of BC (ICABC), a self-governing professional body incorporated provincially under the Accountants (Chartered) Act with approximately 12,000 members.

• The Certified General Accountant Association of BC (CGA-BC), a self governing professional body incorporated provincially under the Accountants (Certified General) Act of British Columbia with approximately 12,000 members.

• The Certified Management Accountants Society of BC (CMABC), a self-governing professional body provincially incorporated under the Accountants (Management) Act with approximately 6,000 members.

All the above legacy bodies were responsible for (a) promoting and maintaining the knowledge, skill and proficiency of its members and students, (b) regulating all matters related to the practice of accounting by its members and students, including competency, fitness, moral character and professional conducts and, to that end, establishing and enforcing standards; and, (c) representing the interests of its members and students.

In working towards unification, the operations of the professional accounting bodies in British Columbia were merged at various stages through the establishment of Joint Venture arrangements. The operations of the Joint Ventures were reported in the 2014 and 2015 audited financial statements of each of the participating legacy bodies.

Legislation to unify the legacy professional accounting bodies was enacted on June 24, 2015. Under this legislation, the legacy bodies were amalgamated and continued as CPABC.



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As there is no identified acquirer in the amalgamation of the three legacy professional accounting bodies, the pooling of interests method has been used to combine the assets, obligations, and operations of the legacy bodies. Under this method, the financial statements of ICABC, CGA-BC, and CMABC were combined to form the current year figures and comparative figures as if the three bodies had been combined from inception.

Although the financial statements for each of the legacy bodies as at March 31, 2015 were audited, the combined comparative figures are unaudited.

The following table provides the net assets, obligations and operations of each of the legacy bodies which were brought into the combination on June 23, 2015 and formed the establishment of CPABC.

Total Elimination as at Joint of Inter-entity June 23, ICABC CGA-BC CMA BC Venture transactions 2015

Total Assets $ 10,961 $ 30,101 $ 6,631 $ – $ (1,182 ) $ 46,511Total Liabilities 7,172 14,988 6,792 – (1,182 ) 27,770Total Revenues 3,236 4,582 1,925 – – 9,743Excess of expenses over revenues $ (41 ) $ (36 ) $ (9 ) $ 600 $ – $ 514

3. INVESTMENTS

March 31, 2016 March 31, 2015

Guaranteed investment certificates (GICs) $ 14,036 $ 21,282Fixed income bonds 1,946 2,368Pooled funds and equities 8,995 1,974Investments in Escrow – 1,278Total investments $ 24,977 $ 26,902

Categorized as:Long-term investments $ 12,819 $ 12,030Short-term investments 12,158 14,872Total investments $ 24,977 $ 26,902

GICs have interest rates ranging from 1.5% to 2.75% (2015 - 0.95% to 2.75%). Fixed income bonds include Canadian corporate and government exchange traded funds and US investment grade exchange traded funds. Pooled funds are invested in Canadian and international equity securities.

Investment income is comprised of the following: March 31, 2016 March 31, 2015

Interest and dividend income $ 431 $ 278Unrealized (losses) gains (52 ) 124Realized gains (losses) 12 – $ 391 $ 402



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4. EQUIPMENT AND LEASEHOLDS

Net Net Book Value Book Value Accumulated March 31, March 31, Cost Amortization 2016 2015

Harbour Centre leasehold improvements $ 2,518 $ 104 $ 2,414 $ 128Bentall leasehold improvements 11 11 – 11 $ 2,529 $ 115 $ 2,414 $ 139

Office furnishings $ 526 $ 83 $ 443 $ 128Computer equipment 1,013 752 261 227Printing equipment 193 20 173 6Hastings Street leasehold improvements – – – 30Bentall Centre leasehold improvements – – – 7 $ 1,732 $ 855 $ 877 $ 398

Total Equipment and Leasehold $ 4,261 $ 970 $ 3,291 $ 537

The Harbour Centre leasehold improvements have been capitalized. Amortization commenced when the newpremise was occupied in August 2015.

5. INTANGIBLE ASSETS

Costs associated with creation of the CPABC member database have been capitalized. Amortization commencedwhen the member database was put in use in July 2015 and will continue to be amortized over 10 years.

Net Net Book Value Book Value Accumulated March 31, March 31, Cost Amortization 2016 2015

Computer software $ 282 $ 136 $ 146 $ 61CPABC Membership database 1,749 95 1,654 876CGA Direct management operating system – – – 204 $ 2,031 $ 231 $ 1,800 $ 1,141



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6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

March 31, 2016 March 31, 2015

Trade payables $ 3,008 $ 3,538Government remittances 482 650Accrued liabilities and other 3,597 4,443 $ 7,087 $ 8,631

7. DEFERRED LEASE INDUCEMENTS

The CPABC received leasehold inducements of $2,063 to fund leasehold improvements for the Harbour Centre premises in 2015. These inducements have been deferred and are being amortized to income on a straight-line basis over the term of the lease.

March 31, 2016 March 31, 2015

Net book value, opening balance $ 139 $ 43Leasehold inducement received for Harbour Centre 1,935 128Current year amortization (103 ) (32 )Net book value, closing balance $ 1,971 $ 139

8. COMMITMENTS AND CONTINGENCIES

a) Commitments include the Harbour Centre lease and general operating leases. The lease term for Harbour Centre commenced August 1, 2015 and extends through to July 31, 2030 with two options to renew for two further 5 year terms. In addition to the minimum lease payments, CPABC is required to pay a portion of operating costs and property taxes. Minimum lease payments required under the terms of the leases are as follows:

2017 $ 810 2018 810 2019 815 2020 816 2021 816 2022 and thereafter 6,835 Total $ 10,902

b) CPABC is committed to the Hastings Lease for a 10-year term which ends in July 2021. A provision of $406 has been provided for the estimated loss to be realized where the terms of the sublease agreement are below the contracted lease rate.

c) CPABC has received statements of claim and is involved with certain legal actions related to various matters arising in the ordinary course of its business. These matters are at various stages and to the extent that the outcome is likely and an amount of costs can be reasonably estimated, an accrual based on the best estimate has been made. Any adjustments to the estimates or differences to the actual costs will be recorded in the period in which additional information becomes available. CPABC has no reason to expect that the ultimate disposition of any of these matters will have a material adverse impact on its financial position, results of operations or its ability to carry on any of its business activities.



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9. INTERNALLY RESTRICTED NET ASSETS

CPABC maintains a policy to internally restrict an amount equal to the net assets invested in equipment, leaseholds and intangible assets.

In addition, on March 31, 2015, the Board approved the following categories of internally restricted net assets:

• Capital Development Fund of $2,312, which is comprised of the planned resources to develop a new IT platform for CPABC and build out and furnish the new leased premises for CPABC.

• Unification Stabilization Fund of $4,000, which is comprised of the anticipated non-recurring costs of unification.

• Strategic Opportunity Fund of $6,500, which is comprised of those resources the Board is restricting for projects that will benefit the profession and its members and students.

These internally restricted amounts are not available for any other purpose without prior approval of the Board. As at March 31, 2016, the following amounts remain internally restricted:

March 31, 2016 March 31, 2015

Invested in Tangible & Intangible Assets $ 3,119 $ 1,539Capital development fund 67 2,312Unification stabilization fund 670 4,000Strategic opportunity fund 6,500 6,500 $ 10,356 $ 14,351

Invested in Capital and Capital Unification Strategic Intangible Development Stabilization Opportunity Total Net Assets Fund Fund Fund TOTAL Unrestricted Assets

Opening Net Assets, April 1, 2015 $ 1,539 $ 2,312 $ 4,000 $ 6,500 $ 12,812 $ 5,054 $ 19,405Less: Non–recurring cost of unification – – (3,330 ) – (3,330 ) – (3,330 ) Excess of revenue over expense before non–recurring costs – – – – – 1,835 1,835 Investment in capital tangible and intangible assets 2,245 (2,245 ) – – (2,245 ) – –Amortization (665 ) – – – – 665 –Net Assets, March 31, 2016 $ 3,119 $ 67 $ 670 $ 6,500 $ 7,237 $ 7,554 $ 17,910

Internally Restricted



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10. RELATIONSHIPS WITH OTHER ORGANIZATIONS

The transactions described below are measured at the exchange amount – the amount of consideration established and agreed to by the other parties.

a) Chartered Professional Accountants of Canada (CPA Canada) was incorporated as a not-for-profit corporation under the Canada Not-for-profit Corporations Act on January 1, 2013 as a result of the unification of three national accounting organizations. These organizations were the Society of Management Accountants of Canada (CMA Canada), the Canadian Institute of Chartered Accountants (CICA) and the Certified General Accountants Association of Canada (CGA Canada). These legacy national organizations will continue to exist until all provincial and territorial organizations have unified. CPA Canada is the national body which supports the provincial accounting bodies that have unified under the Chartered Professional Accountant (CPA) banner in Canada.

b) During 2013, CPA Canada established a Collaboration Accord that defines roles and governance processes for the unified profession going forward. Until the Collaboration Accord is signed, a Transitional Implementation Accord, signed by all the provincial bodies who have agreed to unify, sets the principles and provisions of the Collaboration Accord. Under these mechanisms, CPA Canada and the participating unifying provincial bodies undertook a series of projects to implement the CPA profession’s strategic initiatives and to collaborate nationally. CPA Canada accumulates the related costs and invoices the participating provincial bodies their proportionate share totalling $5,077 (2015 - $4,699). CPABC’s contribution to funding these projects amounted to $699 (2015 - $661). These transactions are reflected in the appropriate cost function on the statement of operations.

During 2016, CPABC collected member dues on behalf of CPA Canada totalling $14,271 (2015 - $9,831). At March 31, 2016 a net amount of $3,021 (2015 – $2,613) was owed to CPA Canada.

c) The Institute of Chartered Accountants of the Yukon, the Society of Management Accountants of Yukon and the Certified General Accountants’ Association of Yukon are administered by CPABC. Administrative fees of $14 (2015 - $14) were charged to these bodies for the services rendered.

d) CPA Insurance Plans West (CPAIPW) administers benefits plans for members of the CPA bodies in Alberta, British Columbia, Manitoba, Saskatchewan, the Northwest Territories, and the Yukon. CPAIPW is a not-for-profit organization under the Income Tax Act. Each of the four western provinces, including CPABC, nominates two persons to serve on CAIPW’s eight-member board. Until December 31, 2014, the legacy ICABC’s employee benefit plan was also administered by CPAIPW, and for the period from April 1 to December 31, 2014, the legacy ICABC paid benefit plan premiums for its employees to CPAIPW totalling $78. Effective January 1, 2015, the legacy ICABC cancelled its employee benefit plan with CPAIPW.

e) CPA Western School of Business (CPAWSB), formerly the CA School of Business until it formally changed its name effective April 1, 2015, is responsible for delivering pre-certification education for students in the four western provinces and the territories, in accordance with an agreement reached in 2000 by the Institutes of Chartered Accountants of Alberta, British Columbia, Saskatchewan, and Manitoba (“member body”). This agreement was replaced and superceded with a revised agreement signed by the CPA bodies in Alberta, British Columbia, Saskatchewan, and Manitoba and CPAWSB effective September 29, 2015. CPAWSB is governed by a twelve member board, with one member elected by each member body and the balance elected by the member bodies.



All in $000’s

CPAWSB is a registered charity incorporated under the Canada Not for Profit Corporations Act, and is not subject to income taxes. In the event of dissolution or winding up of the corporation, all of its remaining assets after payment of liabilities shall be distributed to qualified donees as defined in Section 149.1(1) as amended, of the Income Tax Act (Canada). If a member body withdraws from the agreement prior to operations ceasing, that body would have no right to any of the assets or other property of CPAWSB.

In 2015/16 CPAWSB received funds from CPABC related to the transfers of students to the CPA Pre-Education Program and Professional Education program for an amount of $484.

Cost recoveries in the amount of $273 (2015 - $264) were charged to CPAWSB during the year.

11. CONTROLLED ENTITIES

All of the entities noted below are controlled by CPABC as it appoints the members, directors or trustees, as applicable, which govern each entity. The accounts of the controlled entities noted below have not been consolidated in CPABC’s financial statements as the bylaws and trust agreements of these entities specify that entities’ assets are to be used for specific purposes only, and are not available to CPABC even in the event of the entity’s dissolution; it is believed that separate note disclosure provides a more meaningful presentation of activities.

The transactions described below are measured at the exchange amount being the amount of consideration established and agreed to by the related parties. The summary financial statements of each entity have been provided.

a) The Chartered Professional Accountants’ Education Foundation of British Columbia (CPAEF), formerly the Chartered Accountants Education Foundation (CAEF), is a registered charity under the Income Tax Act. In November 2015, the CAEF held an extraordinary general meeting to approve an amended constitution and bylaws and a name change to become the CPAEF. The CPAEF’s mandate is to enhance the quality and quantity of students entering the CPA profession, sponsor relevant and practical research, and stimulate the ongoing educational experience of CPABC’s members. The CPAEF elects its board members from candidates recommended by CPABC.

CPABC provides the CPAEF with administrative and support services without charge, and charges the CPAEF only for invoices paid on its behalf. At March 31, 2016 a net amount of $133 was owing from CPAEF (2015 – CPABC owed $36 to CPAEF).

b) The CGA-BC Educational Foundation (Foundation) was established in 1988 as a registered charity under the Income Tax Act. The Foundation’s primary purposes are to provide financial assistance to deserving students pursuing the CGA designation and to promote excellence in accounting education. The Foundation must have as one of its seven trustees a member of the Board of Governors of CPABC. The Board of the CGA Association appoints the other trustees. The Foundation’s trustees have approved an Assignment and Assumption Agreement which will transfer all of the Foundation’s property to the CPAEF effective April 1, 2016.

c) The Certified Management Accountants Society of BC Scholarship Fund (Fund) is a registered charity under the Income Tax Act and awards scholarships annually to students in post-secondary institutions in British Columbia who qualify. The Fund is administered by Trustees who are appointed by the Society. The Fund’s board has approved an Assignment and Assumption Agreement which will transfer all of the Fund’s property to the CPAEF effective April 1, 2016. At March 31, 2016 a net amount of $13 (2015 – $5) was owed to the Fund.



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d) The Benevolent Fund is a registered charity under the Income Tax Act. It was established to provide financial assistance to CPABC’s members who are experiencing unusual financial hardships. CPABC appoints the trustees of the Benevolent Fund.

e) The AAT Association of Accounting Technologists of British Columbia (AAT) is a registered society under the Society Act. The AAT Association of Accounting Technologists of British Columbia was formed to protect the usage of the AAT designation awarded to Technologist members of the British Columbia Society. The directors of the Society are the Executive Committee of the Certified Management Accountants Society of British Columbia. There have been no transactions with this entity in 2015 or 2016, and there are no assets or liabilities. On April 25, 2016, the Board made the decision to dissolve the Association as protection of the AAT designation is now contained within the CPABC legislation.

CPABC provides administrative and support services for the above entities without charge.

Summarized Financial Information

Chartered Professional Accountants’ Education Benevolent CMA Scholarship CGA Educational Foundation of BC Fund Fund Foundation

2016 2015 2016 2015 2016 2015 2016 2015

Financial positionTotal assets $ 1,997 $ 1,934 $ 520 $ 519 $ 645 $ 625 $ 787 $ 805Total liabilities 170 22 11 3 72 48 6 5Net assets $ 1,827 $ 1,912 $ 509 $ 516 $ 573 $ 577 $ 781 $ 800 Results of operationsInvestment income earned during the year $ 203 $ 149 $ 10 $ 11 $ 13 $ 13 $ 29 $ 57Unrealized (loss) / gain (238 ) 35 – – – – (36 ) 8Donations 105 53 14 14 7 16 57 122Loan Repayable – 10 – – – – – –Total revenue $ 70 $ 247 $ 25 $ 25 $ 20 $ 29 $ 50 $ 187 Education funding, benevolence and expenses $ 155 $ 131 $ 32 $ 41 $ 24 $ 18 $ 70 $ 86Excess (deficiency) of revenues over expenses $ (85 ) $ 116 $ (7 ) $ (16 ) $ (4 ) $ 11 $ (20 ) $ 101 Cash FlowsOperating $ 278 $ 58 $ (12 ) $ (16 ) $ 13 $ 19 $ 33 $ 80Investments (acquired) sold (186 ) (33 ) 9 (9 ) 65 (41 ) (28 ) (55 )Net increase (decrease) in cash $ 92 $ 25 $ (3 ) $ (25 ) $ 78 $ (22 ) $ 5 $ 25



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12. FINANCIAL INSTRUMENTS

CPABC’s financial instruments consist of cash, short-term investments, accounts receivable, long-term investments, and accounts payable and accrued liabilities.

Interest Rate Risk CPABC manages the interest rate risk exposure of its fixed income investments by investing in bonds and guaranteed investment certificates with varying terms and maturity dates. Investments in equity securities are not exposed to significant interest rate risk.

Currency Risk CPABC mitigates the currency risk exposure of its foreign bonds and equities through diversification. The Canadian portion of the portfolio was 97% at March 31, 2016 (2015 – 95%).

Credit and Market Risk CPABC has an investment policy that restricts the types and amounts of its eligible investments and requires dealing with highly rated counterparties. Risk and volatility of investment returns are mitigated through the diversification of investments in different geographic regions and different investment vehicles.

13. ALLOCATION OF OVERHEAD COSTS

Expenses directly related to a functional area are charged to that area, including salaries and benefits, contractor costs and all other expenses directly related to the activities of that area. Overheads have been allocated to the various functional areas on the basis of estimated usage as follows:

• Expenses related to premises, including rent, maintenance and amortization – proportionately based on office space used;

• Expenses related to general administration, including insurance, telephone and supplies – proportionately based on number of staff; and

• Expenses related to information technology, including computer equipment and connectivity – proportionately based on number of staff.

The overhead costs allocated per functional areas are as follows:

March 31, 2016 March 31, 2015

Professional Development $ 303 $ 353 Student Education Program 284 534 Regulatory Affairs: Public Practice Registration & Review 180 195 All Other Regulatory Affairs 302 239 Member Services and Engagement 130 183 Communications, Business Development & Recruiting, External Affairs 552 516 Governance & Executive Office 94 199 Information Technology 299 247 Administrative Support 766 588 $ 2,910 $ 3,054

Chartered Professional Accountants of British Columbia 800-555 West Hastings Street Vancouver BC CANADA V6B 4N6T. 604 872.7222 F. 604 681.1523 TF. 1 800 663.2677 www.bccpa.ca

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