Independent Auditors’ Report

To the Members of Canadian Beverage Container Recycling Association:

Opinion

We have audited the financial statements of Canadian Beverage Container Recycling Association (the “Entity”), which comprise the statement of financial position as at December 31, 2019 and the statements of operations, changes in net assets and cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies (hereinafter referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of the Financial Statements” section of our auditors’ report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and we have fulfilled our other ethical responsibilities in accordance with these requirements.

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

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Entity’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity’s financial reporting process.

Auditors’ Respons ibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

    The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity’s internal control.

  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Entity to cease to continue as a going concern.

  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  • Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Chartered Professional Accountants
Winnipeg, Canada
April 8, 2020

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

Statement of financial position

December 31, 2019, with comparative information for 2018

ASSETS 2019 2018
Current assets:
Cash $4,418,205 $2,132,578
Accounts receivable $533,641 $2,132,018
Prepaid expenses $18,543 $37,661
Inventory $526,245 $482,513
$5,496,634 $4,784,770
Capital assets, net of accumulated amortization
of $142,056 (2018 - $126,387)
$7,213 $18,764
$5,503,847 $4,803,534
LIABILITIES AND FUND BALANCES
Current liabilities:
Accounts payable and accrued liabilities (note 2) $703,107 $737,223
Net assets:
Invested in capital assets $7,213 $18,764
Internally restricted (note 1[a]) $1,000,000 $1,000,000
Unrestricted $3,793,527 $3,047,547
$4,800,740 $4,066,311
Commitments (note 4)
Subsequent event (note 5)
$5,503,847 $4,803,534

See accompanying notes to financial statements.

On behalf of the Board:

Jim Goetz
Chairman

Neil Antymis
Director

Statement of Operations

Year ended December 31, 2019, with comparative information for 2018

2019 2018
Revenue:
Container recycling fees $8,881,268 $9,424,329
Interest income $28,073 $21,727
$8,909,341 $9,446,056
Program Expenses:
Awareness campaign $2,690,504 $2,604,810
Multi Material Stewardship Manitoba $1,205,478 $1,697,169
Program management services (note 4) $1,149,266 $1,149,266
Industrial, Commercial and Institutional Program $959,152 $694,735
Municipal Public Spaces Program $757,984 $889,501
Events Recycling Program $392,476 $262,374
Government Buildings Program $281,721 $264,440
Waste Audit $247,016 $274,018
RE101 Schools $187,170 $97,123
Post-secondary Program $8,173 $46,751
$7,878,940 $7,980,187
Operating Expenses:
Administrative expenses (schedule) $225,895 $307,499
Steward services (note 4) $70,077 $70,077
$295,972 $377,576
$8,174,912 $8,357,763
Excess of revenue over expenses $734,429 $1,088,293

See accompanying notes to financial statements.

Statement of Changes in net assets

Year ended December 31, 2019, with comparative information for 2018

Invested in capital assets Internally restricted Unrestricted 2019 2018
Balance, beginning of year $18,764 $1,000,000 $3,047,547 $4,066,311 $2,978,018
Excess (deficiency) of revenue over expenses (15,669) 750,098 734,429 1,088,293
Purchase of capital assets 4,118 (4,118)
Balance, end of year $7,213 $1,000,000 $3,793,527 $4,800,740 $4,066,311

See accompanying notes to financial statements.

Statement of Cash flows

December 31, 2019, with comparative information for 2018

CASH PROVIDED BY (USED IN): 2019 2018
Operating activities:
Excess of revenue over expenses $734,429 $1,088,293
Items not involving cash: Amortization of capital assets $15,669 $23,113
Change in non-cash operating working capital:
Accounts receivable $1,598,377 ($1,429,012)
Prepaid expenses $19,118 ($13,082)
Inventory ($43,732) ($183,846)
Accounts payable and accrued liabilities ($34,116) ($1,027,752)
  $2,289,745 ($1,542,286)
Investing activities:
Purchase of capital assets ($4,118)
Increase (decrease) in cash $2,285,627 ($1,542,286)
Cash, beginning of year $2,132,578 $3,674,864
Cash, end of year $4,418,205 $2,132,578

See accompanying notes to financial statements.

Notes TO financial statements

Year ended December 31, 2019

The Canadian Beverage Container Recycling Association (CBCRA) is a not-for-profit organization that was established by beverage companies to improve beverage container recycling rates in Manitoba. CBCRA’s purpose is to promote and facilitate the recycling of end-of-life beverage containers through the design and funding of recycling programs and public promotion and education.

CBCRA was incorporated without share capital on March 26, 2010 under Part II of the Canada Corporations Act and commenced operations on April 1, 2010. CBCRA’s objective is to carry on its operations without pecuniary gain to its members and any profits or other accretions to CBCRA are to be used in promoting its objects.

CBCRA is exempt from income taxes under Section 149(1) of the Income Tax Act.

1. Significant accounting policies:

These financial statements are prepared in accordance with Canadian accounting standards for not-for-profit organizations and include the following significant accounting policies.

  • (a) Revenue recognition:

    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.

    Internally restricted net assets represent funds restricted for use by CBCRA that reflect approximately six months’ worth of program management costs, and other one-time project costs. The use of internally restricted net assets requires the approval of the Board of Directors.

  • (b) Cash:

    Cash consists of cash on hand and cash held at banking institutions.

  • (c) Inventory:

    Inventory is recorded at landed cost and consists of recycling bins and carts being held for future use in CBCRA programs.

  • (d) Capital assets and amortization:

    Capital assets are recorded at original cost less accumulated amortization.

    Amortization of furniture and equipment is recorded on a straight-line basis over the assets’ useful lives of 5 years. Amortization of computers and computer software is recorded on a straight-line basis over the assets’ useful lives of 3 years.

  • (e) Financial instruments:

    • (i) 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.

    • (ii) Impairment:

      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.

    • (f) 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.

    2. 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, $35,383 (2018 - $20,652) is included within accounts payable and accrued liabilities.

    3. 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 receivable. 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 receivable.

    • (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.

    4. Commitments:

    • (a) CBCRA has operating leases for premises requiring approximate annual rental payments to the end of the leases as follows:

      2020 $92,946
      2021 $86,251
      2022 $79,556
      2023 $40,257
    • (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 2020 at a monthly amount of $101,612 (2018 - $101,612).

      During 2019, payments under this commitment totaled $1,219,343 (2018 - $1,219,343) and are included in program management services and steward services.

    5. Subsequent event:

    Subsequent to December 31, 2019 the COVID-19 outbreak was declared a pandemic by the World Health Organization. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and the financial effect on our business is not known at this time.

Schedule of administrative expenses

Year ended December 31, 2019

2019 2018
Amortization $15,669 $23,113
Audit, legal and professional fees $36,321 $31,237
Bad debts $10,010
Bank charges $2,597 $2,500
Board expenses $17,691 $15,883
Consulting $1,800 $63,802
Dues and memberships $6,218 $9,948
Insurance $10,257 $11,569
Interest and other charges $220 $1,112
Office supplies $11,312 $16,631
Postage and courier $10,214 $5,925
Rent $92,860 $98,450
Telephone $20,736 $17,319
$225,895 $307,499