Chair's Report

Financial report

Archived Financial Reports

Financial Report: Year ended March 31, 2007

• Auditors' Report to the Board of Directors
• Statement of Financial Position
• Statement of Operations
• Statement of Changes in Net Assets
• Statement of Cash Flows
• Notes to Financial Statements

AUDITORS' REPORT TO THE BOARD OF DIRECTORS

We have audited the statement of financial position of the Alberta Law Foundation as at March 31, 2007 and the statements of operations, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Foundation's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Foundation as at March 31, 2007 and the results of its operations and its cash flows for the year then ended in accordance with the Canadian generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the Foundation taken as a whole. The supplementary information included in the Schedule is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

(signed) KPMG LLP
Chartered Accountants

Calgary, Canada
May 4, 2007

STATEMENT OF FINANCIAL POSITION

March 31, 2007, with comparative figures for 2006

	2007	2006
ASSETS
Current Assets:
Cash	$ 131,192	$ 140,000
Accrued interest:
Marketable securities	820,325	378,076
Lawyers' general trust accounts	6,392,716	3,537,709
	7,344,233	4,055,785
Fixed rate investments (note 2)	76,458,615	40,364,296
	$83,802,848	$ 44,420,081
LIABILITIES
Current liabilities:
Grants payable (schedule):
General (note 5)	$ 13,465,975	$ 9,255,006
Special project fund	595,888	836,044
	14,061,863	10,091,050
Payable to Legal Aid Society of Alberta (note 3)	13,374,431	5,536,939
	27,436,294	15,627,989
NET ASSETS
Special project fund (note 1)	---	597,312
Grant stabilization fund (note 1)	31,857,132	24,334,461
Strategic reserve fund (note 1)	20,000,000	---
Unrestricted (note 1)	4,509,422	3,860,319
	56,366,554	28,792,092
Commitment (note 7)
	$ 83,802,848	$ 44,420,081

See accompanying notes to financial statements.

STATEMENT OF OPERATIONS

Year ended March 31, 2007, with comparative figures for 2006

	2007	2006
Revenue:
Interest received on lawyers' general trust accounts	$ 53,497,726	$ 20,935,582
Interest earned from fixed rate investments	2,22,304	1,236,740
Unclaimed trust balances from Law Society of Alberta	93,377	48,392
	55,817,407	22,220,714
Expenses:
Salaries	175,553	154,911
Investment advisory fee	112,277	67,119
Rent and parking	54,665	48,833
Board travel and meetings	35,163	28,972
Professional fees	19,967	12,136
Insurance	14,082	14,049
Printing	4,166	3,096
Staff travel and meetings	3,021	4,071
Telephone	2,614	1,921
Equipment	2,373	---
Postage	1,745	2,459
Office supplies	1,421	1,101
Website and computer	1,201	10,424
Photocopying	928	1,468
Other	602	2,465
Bank charges	254	541
	430,032	353,566
Allocation to Legal Aid Society of Alberta (note 3)	13,374,431	5,536,939
Excess of revenue over expenses before project allocations	42,012,944	16,330,209
Deduct: Project allocations from unrestricted net assets:
Research and reform	1,172,199	370,660
Law libraries	---	128,000
Public legal education	2,103,340	260,689
Native and student assistance	108,316	56,155
	3,383,855	815,504
Core program allocations from unrestricted net assets:
Research and reform	3,963,700	3,040,630
Law libraries	950,000	875,000
Public legal education	4,060,427	3,050,089
Native and student assistance	1,916,017	1,361,989
	10,890,144	8,327,708
Add:
Project refunds (note 4)	149,196	216,036
Allocations withdrawn from projects	283,189	187,731
	432,385	403,767
Excess of revenue over expenses	$ 28,171,330	$ 7,590,764

See accompanying notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS

Year ended March 31, 2007, with comparative figures for 2006

	2007
	Special project fund	Grant Stabilization Fund	Unrestricted	Strategic Reserve Fund	2007 Total	2006 Total
Balance, beginning of year, as restated	$597,312	$24,334,461	$3,860,319	$ ---	$28,792,092	$22,204,016
Excess of revenue over expenses	---	---	28,171,330	---	28,171,330	7,590,764
Internally designated transfers	(447)	7,522,671	(27,522,224)	20,000,000	---	---
Grants awarded - Special project (schedule)	(596,865)	---	---	---	(596,865)	(902,688)
Balance, end of year	$ ---	$31,857,132	$4,509,422	$20,000,000	$56,366,554	$28,792,092

See accompanying notes to financial statements.

STATEMENT OF CASH FLOWS

Year ended March 31, 2007, with comparative figures for 2006

	2007	2006
Cash provided by (used in):
Operations:
Excess of revenue over expenses	$ 28,171,330	$ 7,590,764
Changes in non-cash working capital:
Special project fund grants awarded	(596,865)	(902,688)
Grants payable	3,970,813	1,293,515
Payable to Legal Aid Society of Alberta	7,837,492	3,125,502
Accounts receivable - Lawyers' general trust accounts	(2,855,007)	(2,325,533)
	36,527,763	8,781,560
Investments:
Amortization of premiums and discounts	21,175	25,965
Purchase of fixed rate investments	(64,783,716)	(36,983,800)
Maturities of fixed rate investments	28,668,219	28,163,285
Accrued interest	(44,249)	6,654
	(36,536,571)	(8,787,896)
Decrease in cash	(8,808)	(6,336)
Cash, beginning of year	140,000	146,336
Cash, end of year	$ 131,192	$ 140,000

See accompanying notes to financial statements.

NOTES TO FINANCIAL STATEMENTS

Year ended March 31, 2007

Nature of operations:

The Alberta Law Foundation (the "Foundation") was established by amendments to the Legal Profession Act, which became effective on April 1, 1973. The Foundation is the recipient of the interest which banks, credit unions, trust companies, and treasury branches must pay on clients' funds held in lawyers' general trust accounts. The interest earned is calculated and remitted to the Foundation based on agreements made with individual financial institutions. This does not include interest paid on a specific trust investment held for an individual client. The interest is made available by the Foundation to organizations engaged in activities which are considered to be in keeping with the Foundation's objects pursuant to the Legal Profession Act. The Foundation is a not-for-profit organization as defined in the Income Tax Act (Canada) and is exempt from income taxes.

1. Significant accounting policies:

(a) Interest received on lawyers' general trust accounts:
The Foundation reports interest received on lawyers’ general trust accounts as received or determinable. The lawyers’ general trust accounts are not the property of, nor administered by, the Foundation. The Foundation accrues the amount of interest at the time the amounts are determinable from the individual financial institutions. For the fiscal year ending March 31, 2007 the Foundation recognized interest earnings of approximately $6.4 million (2006 - $3.5 million) from lawyers’ general trust accounts that were received subsequent to year-end.

(b) Fixed rate investments:
Fixed rate investments are carried at cost. If the market value of investments becomes lower than cost and this decline is considered to be other than temporary, the investments are written down to market value. The purchase premium or discount, if any, is charged to revenue and expenses over the life of the investment. Interest earned on fixed rate investments is recorded on the accrual basis.

(c) Property and equipment:
Purchases of property and equipment are recorded at cost. Depreciation is provided on a straight-line basis over the estimated life of the asset. All individual items under $5,000 are expensed in the year purchased.

(d) Special project fund:
The Special Project Fund is a temporary reserve fund set up by the Directors of the Foundation to meet a variety of specific objectives. During 2006 the Directors established a Special project fund and elected to transfer an amount of $1,500,000 from Unrestricted Net Assets to the fund. Grants in the amount of $902,688 were approved from this fund during 2006, and $596,865 during 2007. The remaining balance of $447 was returned to Unrestricted Net Assets.

(e) Grant stabilization fund (previously Internally Restricted Net Assets):
Grant stabilization funds represent amounts which are reserved for future funding of committed programs and require the approval of the Board of Directors prior to allocation.

(f) Strategic reserve fund:
The Directors of the Foundation established a Strategic Reserve in 2007. These funds represent amounts which are reserved for long term strategic purposes and require the approval of the Board of Directors prior to allocation.

(g) Unrestricted:
Unrestricted net assests represent amounts which have not been committed to projects, core programs or otherwise restricted.

2. Fixed rate investments:

	2007		2006
	Cost	Market value	Cost	Market value
Government of Canada, T-bills, bond	$ 2,742,789	$ 2,756,640	$ 4,519,207	$ 4,541,454
Crown Corporations notes	9,470,450	9,253,748	6,799,204	6,574,814
Provincial Government notes	19,165,313	19,248,582	5,753,088	5,606,847
Canadian Banks notes	40,230,434	40,353,581	18,190,121	18,156,874
Corporations notes, debentures	3,336,716	3,387,602	4,603,385	4,588,586
Municipal notes	1,512,913	1,509,550	499,291	493,610
	$76,458,615	$76,509,703	$40,364,296	$39,962,185

As at March 31, 2007, market values reflect increases or decreases from cost due to current interest rates differing the contractual rates, and unrealized gains on certain investments. Investments are intended to be held to maturity.

Fixed rate investments yield to maturity 2.84% to 6.35% per annum. Interest of $2,226,304 (2006 - $1,236,740) was earned during the year.

Interest rate risk:
Interest rate risk arises from holding fixed rate investments.

Credit risk:
Credit risk arises from the potential for an investee to fail. Credit risk is managed by the Foundation's Board of Directors in accordance with their investment policy.

3. Payable to Legal Aid Society of Alberta:

The Legal Profession Act requires the Foundation to pay 25% of its interest received on lawyers’ general trust accounts to the Legal Aid Society of Alberta not more than six months after each fiscal year end.

4. Project refunds:

Project refunds represent funds returned to the Foundation from projects which did not require all the funds originally advanced to them by the Foundation.

5. Grants payable:

6. Financial instruments:

The Foundation’s financial instruments recognized in the balance sheet consist of cash, fixed rate investments, lawyers' general trust accounts, accrued interest, grants payable and a payable to Legal Aid Society of Alberta. The fair values of these financial instruments approximate their carrying amounts. The fair value of fixed rate investments is disclosed in note 2.

7. Commitment:

At March 31, 2007, the Foundation was committed to future operating lease payments for office premises, expiring August 31, 2012, in the following amounts:

Archived Reports

Updated: July 2007