Notes to summary financial statements
May 31, 2020
1. Summary financial statements
The summary financial statements are derived from the complete audited financial statements, prepared in accordance with Canadian accounting standards for not-for-profit organizations as at May 31, 2020, and for the year then ended.
The preparation of these summary financial statements requires management to determine the information that needs to be reflected in the summary financial statements so that they are consistent, in all material respects, with or represent a fair summary of the audited financial statements.
These summary financial statements have been prepared by management using the following criteria:
[a] Whether information in the summary financial statements is in agreement with the related information in the complete audited financial statements; and
[b] Whether, in all material respects, the summary financial statements contain the information necessary to avoid distorting or obscuring matters disclosed in the related complete audited financial statements, including the notes thereto.
Management determined that the statements of changes in net assets and cash flows do not provide additional useful information and, as such, has not included them as part of the summary financial statements.
The complete audited financial statements of The Nature Conservancy of Canada [the “Conservancy”] are available upon request by contacting the Conservancy.
2. Revenue recognition
The Conservancy follows the deferral method of accounting for contributions. Revenue related to the sale of carbon offset credits is recognized when the Conservancy has transferred to the buyer the significant risks and rewards of the ownership of the carbon credits, the amount is fixed and determinable and collectability is reasonably assured.
3. Conservation lands and agreements
Purchased conservation lands and agreements are recorded at cost when title is transferred. The purchases are recorded as an expense to the extent that the purchase is internally financed. Repayments of debt related to property acquisitions are expensed when made. An amount equal to the expense related to purchases and debt repayments is added to net assets invested in conservation lands and agreements. When a loan is obtained in a subsequent year related to an internally financed purchase, an amount equal to the debt is transferred from net assets invested in conservation lands and agreements to operating surplus.
Contributed conservation lands and agreements are recorded at fair market value when title is transferred. When purchased conservation lands and agreements are acquired substantially below fair market value, the difference between consideration paid and fair value is reported as contributed conservation lands and agreements. The contributions are recorded as revenue and expenses and also as an asset offset by net assets invested in conservation lands and agreements.
Properties transferred to others are recorded as a reduction of conservation lands and agreements and net assets invested in conservation lands and agreements.
Conservation lands and agreements, either purchased or donated, are assets held as part of the Conservancy’s collection. Conservation agreements are legal agreements entered into by the Conservancy under which a landowner voluntarily restricts or limits the type and amount of development that may take place on his or her land to conserve its natural features. Once registered on title, that agreement runs with the title and binds all future owners.
4. Allocation of expenses
Salaries and benefits expenses are allocated between property-related and support expenses based on the primary job responsibilities of the employee’s position. No support expenses are allocated to property-related expenses.
5. Donated materials and services
Donated materials and services are not recognized in the summary financial statements.
The Conservancy has provided a general security agreement over all of its assets, excluding conservation lands and agreements, with one financial institution. In addition, as at May 31, 2020, the Conservancy has one long-term debt facility of $1,634,500 that is secured by conservation lands and agreements with a carrying value of $1,673,275.
The nature of the Conservancy’s activities is such that there is often litigation pending or in progress. Where the potential liability is likely and able to be estimated, management records its best estimate of the potential liability. With respect to claims as at May 31, 2020, it is management’s position that the Conservancy has valid defences and appropriate insurance coverage to offset the cost of unfavourable settlements, if any, which may result from such claims. In other cases, the ultimate outcome of the claims cannot be determined at this time, and as such, no accruals have been made as at May 31, 2020.
8. COVID-19 pandemic
In March 2020, the World Health Organization declared the spread of the novel coronavirus [“COVID-19”] to be a global pandemic. This resulted in governments worldwide enacting emergency measures to combat the spread of the virus, including travel restrictions in and out of Canada, barring gatherings of people, and the implementation of other social distancing measures. These restrictions had no significant impact on the operations of the Conservancy as systems were sufficiently flexible and robust to facilitate remote work.
Management considered the impact of COVID-19 in its assessment of the Conservancy’s assets and liabilities and its ability to continue as a going concern. Management believes that the current stability of its revenues and sufficiency of its liquid resources enable the Conservancy to effectively manage through the COVID-19 pandemic.