Understanding Club Financial Statements and Audits
Financial statements are essential tools for understanding a club's financial health. They include the Statement of Financial Position, Revenue and Expenditures, and Cash Flow Statement. Audited statements, prepared by independent accounting firms, ensure accuracy and compliance with legislation. A clean audit indicates accuracy, with any concerns noted in qualifications. Revenue and Expenditure Statements highlight club financial performance, with comparisons to budgets showing variances.
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2022 Audited Statement AGM Review September 28, 2023
What is a Financial Statement? The audited financial statements were distributed to all members with the notice of the AGM. They are available on the ABYC website. A financial statement contains three important documents: 1. Statement of Financial Position this provides the starting point of what the club owns (assets) and what the club owes (liabilities) at the beginning and end of the year. The difference is member equity (net equity). Statement of Revenue and Expenditures this provides a picture of all revenue and expenses that went through the club during 2022. The result of the year s operations are then used to update the Statement of Financial Position at the end of the year. Cash Flow Statement this shows where the cash was spent during the year. 2. 3. 2
What is an Audited Statement? An audited financial statement is one prepared by an independent outside accounting firm. It is required by the legislation that governs ABYC. The auditors examine the internal financial statements over a period of weeks to satisfy itself that the information provided by the client is accurate in all material respects. This may result in entries that are adjusted through the audit process. This is a normal and expected part of all audits. Most audited statements usually provide notes that provide some discussion about the numbers in the three documents. The auditors provide an introductory letter to the audited statements. If any concerns arose during the audit, those concerns are often expressed in qualifications attached to the introductory letter. Financials are available on the website In the case of the 2022 audited financial statements, the audit was clean with few correcting entries. The introductory letter contained no qualifications. 3
Revenue & Expenditure Statement 4
Statement of Revenue and Expenditures - Highlights Club Revenue was $2,551,485, 7.1% increase from 2021; largely due to increases in F&B and sailing school. Total expenses were $2,325,585, increase of 28.1% from 2021. Increase spread between F&B, sailing school, harbour, publicity & regalia, racing, G&A, buildings and crane yard. Ordinarily expenses should not outpace revenue in increases but 2021 was a Covid year so expenses weren t normal . In fact, these increases were only $25k above budget (see next slide). Surplus (profit) was $225,900. This should be divided up into operating revenue and expenses showing a small deficit of $17,428, initiation fees of $103,025 and capital assessments of $140,303. Operating revenue and expenses are items that are tied to the year in question and rough break-even is expected. Capital revenue (initiation fees and capital assessments) is revenue that may be spent in the current or future years. Original budgeted surplus $188,977. At January 23 Budget meeting, actual surplus was projected at $230,114. 5
Statement of Financial Position (Balance Sheet) 7
Balance Sheet Highlights Cash decreased from $1.3 million to $630,000. The cash paid for our new docks, blue wall, cladding. Capital assets increased from $2.9 million to $3.8 million these new assets are the new docks, blue wall and cladding. Under liabilities, we included current portion of member loan paid June 30, 2022 - $199,400. Balance of member loan is treated as a longer term debt reduced from $1 million to $797,600. ABYC has a strong net equity position - $3.7 million. 8
Cash Flow Statement 9
Cash Flow Statement Highlights Amortization (which is a non-cash accounting entry to reflect the usage of capital assets) was $301k, an increase from $232k in 2021 to reflect more capital assets. The purchase of capital assets in 2022 was similar to 2021 - $884k vs. $879k. However, capital assets in progress at year end was much higher - $355k vs. $30k. Cash spent during the year (mostly on capital assets) was $689k. This left our ending cash position at $630,149 from $1,319,341 the previous year. 10
Questions? All questions are welcome at any time. Emailed questions in advance of the AGM are encouraged in case the question requires investigation. Questions can be emailed to vcfinance@ABYC.ca. 11
Approval of Financial Statements Financials have been available on the website and were circulated to the membership by email. Generally consistent with discussions at original budget meeting for 2022 and budget meeting for 2023 in January 2023. Motion: That the Financial Statements for the year ended 31 December 2022 be accepted as presented . 12
Appointment of Auditors Now third year with Adams & Miles. The Board recommends to the Membership that we appoint Adams & Miles as Auditors for the 2023 year. Motion: That Adams & Miles be appointed as Club Auditors for the year 2023 13
