3. Summary of significant accounting policies
CBCRA follows the deferral method of accounting for contributions. Restricted contributions are recognized as revenue in the year in which the related expenses are incurred.
Container recycling fees are recognized as unrestricted income in the month in which they are earned, if the amount to be received can be reasonably estimated and collection is reasonably assured.
Cash consists of cash on hand and cash held at banking institutions.
Inventory is recorded at landed cost and consists of recycling bins and carts being held for future use in CBCRA programs.
Capital assets and amortization
Capital assets are recorded at original cost less accumulated amortization.
Amortization of furniture and equipment is recorded on a declining balance basis of 20% over the assets’ useful lives. Amortization of computers and computer software is recorded on a declining balance basis of 33% over the assets’ useful lives.
Use of estimates
The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.
a) Measurement of financial instruments
CBCRA initially measures its financial assets and financial liabilities at fair value adjusted by, in the case of a financial instrument that will not be measured subsequently at fair value, the amount of transaction costs directly attributable to the instrument.
CBCRA subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments in equity instruments, which are subsequently measured at fair value. Changes in fair value are recognized in the statement of operations.
Financial assets measured at amortized cost include cash and accounts receivable.
Financial liabilities measured at amortized cost include accounts payable and accrued liabilities.
Financial assets measured at amortized cost are tested for impairment when there are indicators of possible impairment. When a significant adverse change has occurred during the period in the expected timing or amount of future cash flows from the financial asset or group of assets, a writedown is recognized in the statement of operations. When events occurring after the impairment confirm that a reversal is necessary, the reversal is recognized in the statement of operations up to the amount of the previously recognized impairment.
4. Government remittances
Government remittances consist of amounts required to be paid to government authorities and are recognized when the amounts become due. In respect of government remittances, $1,196,282 (2016 - $1,087,383) is included within accounts payable and accrued liabilities.
5. Financial instruments
CBCRA manages risk and risk exposures by applying policies approved by the Board of Directors. The significant financial risks to which CBCRA is exposed are credit risk and liquidity risk.
a) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
CBCRA’s financial instruments that are exposed to concentration of credit risk consist primarily of cash and accounts receivables. Cash, at times, may exceed amounts insured by the Canadian Deposit Insurance.
Corporation or the Credit Union Deposit Guarantee Corporation. CBCRA has a large number of members, which minimizes the concentration of credit risk on accounts receivables.
b) Liquidity risk
Liquidity risk is the risk that CBCRA will encounter difficulty in meeting obligations associated with financial liabilities.
CBCRA has established budgetary and cash forecasts to ensure it has the funds necessary for fulfilling its obligations.
a) CBCRA has an operating lease for premises requiring approximate annual rental payments as follows:
b) A program management services agreement is in place with Reclay StewardEdge Inc. to provide various management, administrative and communication tasks to CBCRA until December 2017 at a monthly amount of $89,623 (2016 - $88,676).
During 2017, payments under this commitment totalled $1,075,476 (2016 - $1,080,321) and are included in program management services and steward services.