Chair's Report

Financial report

Archived Financial Reports

Financial Report: Year ended March 31, 2006

• 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, 2006 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, 2006 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 3, 2006

STATEMENT OF FINANCIAL POSITION

March 31, 2006, with comparative figures for 2005

	2006	2005 (restated - note 8)
ASSETS
Current Assets:
Cash	$ 140,000	$ 146,336
Accrued interest:
Marketable securities	378,076	384,730
Lawyers' general trust accounts	3,537,709	1,212,176
	4,055,785	1,743,242
Fixed rate investments (note 2)	40,364,296	31,569,746
	$ 44,420,081	$ 33,312,988
LIABILITIES
Current liabilities:
Grants payable (schedule):
General (note 5)	$ 9,255,006	$ 8,797,535
Special project fund	836,044	---
	10,091,050	8,797,535
Payable to Legal Aid Society of Alberta (note 3)	5,536,939	2,411,437
	15,627,989	11,208,972
NET ASSETS
Special project fund (note 1)	597,312	---
Internally restricted (note 1)	24,334,461	20,871,744
Unrestricted (note 1)	3,860,319	1,232,272
	28,792,092	22,104,016
Commitment (note 7)
	$ 44,420,081	$ 33,312,988

See accompanying notes to financial statements.

STATEMENT OF OPERATIONS

Year ended March 31, 2006, with comparative figures for 2005

	2006	2005 (restated - note 8)
Revenue:
Interest received on lawyers' general trust accounts	$ 20,935,582	$ 10,013,311
Interest earned from fixed rate investments	1,236,740	1,199,307
Unclaimed trust balances from Law Society of Alberta	48,392	---
	22,220,714	11,212,618
Expenses:
Salaries	154,911	156,951
Investment advisory fee	67,119	66,575
Rent and parking	48,833	47,788
Board travel and meetings	28,972	26,844
Insurance	14,049	14,010
Professional fees	12,136	9,630
Website and computer	10,424	1,819
Staff travel and meetings	4,071	3,506
Printing	3,096	3,006
Other	2,465	1,358
Postage	2,459	3,993
Telephone	1,921	2,079
Photocopying	1,468	865
Office supplies	1,101	676
Bank charges	541	365
	353,566	339,465
Allocation to Legal Aid Society of Alberta (note 3)	5,536,939	2,411,437
Excess of revenue over expenses before project allocations	16,330,209	8,461,716
Deduct: Project allocations from unrestricted net assets:
Research and reform	370,660	512,017
Law libraries	128,000	292,800
Public legal education	260,689	348,475
Native and student assistance	56,155	13,491
	815,504	1,166,783
Core program allocations from unrestricted net assets:
Research and reform	3,040,630	2,686,926
Law libraries	875,000	875,000
Public legal education	3,050,089	2,737,692
Native and student assistance	1,361,989	801,798
	8,327,708	7,101,416
Add:
Project refunds (note 4)	216,036	71,535
Allocations withdrawn from projects	187,731	18,854
	403,767	90,389
Excess of revenue over expenses	$ 7,590,764	$ 283,906

See accompanying notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS

Year ended March 31, 2006, with comparative figures for 2005

	2006
	Special project fund	Internally restricted	Unrestricted	2006 Total	2005 Total (restated - note 8)
Balance, beginning of year, as previously reported	$ ---	$ 20,871,744	$ 20,096	$ 20,891,840	$ 14,018,250
Amendment for 2005 and 2004 interest (note 8)	---	---	1,212,176	1,212,176	844,612
Balance, beginning of year, as restated	---	20,871,744	1,232,272	22,104,016	14,862,862
Excess of revenue over expenses	---	---	7,590,764	7,590,764	283,906
Internally designated transfers	---	3,462,717	(3,462,717)	---	6,957,248
Allocation to Special project fund (note 1(d))	1,500,000	---	(1,500,000)	---	---
Grants awarded - Special projects (schedule)	(902,688)	---	---	(902,688)	---
Balance, end of year	$597,312	$24,334,461	$3,860,319	$28,792,092	$22,104,016

See accompanying notes to financial statements.

STATEMENT OF CASH FLOWS

Year ended March 31, 2006, with comparative figures for 2005

	2006	2005 (restated - note 8)
Cash provided by (used in):
Operations:
Excess of revenue over expenses	$ 7,590,764	$ 283,906
Changes in non-cash working capital:
Special project fund grants awarded	(902,688)	---
Grants payable	1,293,515	441,552
Payable to Legal Aid Society of Alberta	3,125,502	(443,216)
Accounts receivable - Lawyers' general trust accounts	(2,325,533)	(367,564)
	8,781,560	(85,322)
Investments:
Amortization of premiums and discounts	25,965	(60,743)
Purchase of fixed rate investments	(36,983,800)	(21,403,455)
Maturities of fixed rate investments	28,163,285	21,422,401
Accrued interest	6,654	124,637
	(8,787,896)	82,840
Decrease in cash	(6,336)	(2,482)
Cash, beginning of year	146,336	148,818
Cash, end of year	$ 140,000	$ 146,336

See accompanying notes to financial statements.

NOTES TO FINANCIAL STATEMENTS

Year ended March 31, 2006

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, 2006 the Foundation recognized interest earnings of approximately $3.5 million (2005 - $1.2 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.

(e) Internally restricted:
Internally restricted net assets represents amounts which are reserved for future funding of committed programs and require the approval of the Board of Directors prior to allocation.

(f) Unrestricted:
Unrestricted net assets represents amounts which have not been committed to projects, core programs or otherwise restricted.

(g) Comparative figures:
Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year.

2. Fixed rate investments:

	2006		2005
	Cost	Market value	Cost	Market value
Government of Canada, T-bills, bond	$ 4,519,207	$ 4,541,454	$ 1,407,896	$ 1,409,563
Crown Corporations notes	6,799,204	6,574,814	8,207,388	8,193,057
Provincial Government notes	5,753,088	5,606,847	3,250,000	3,240,369
Canadian Banks notes	18,190,121	18,156,874	13,417,598	13,449,468
Corporations notes, debentures	4,603,385	4,588,586	4,787,848	4,843,555
Municipal notes	499,291	493,610	499,016	499,331
	$40,364,296	$39,962,185	$31,569,746	$31,635,343

As at March 31, 2006, market values reflected a decline in value due to current interest rates exceeding the contractual rates. This decline is considered temporary as investments are intended to be held to maturity.

Fixed rate investments yield to maturity 2.72% to 6.35% per annum. Interest of $1,236,740 (2005 - $1,199,307) was received 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, accrued interest, grants payable and a payable to Legal Aid Society of Alberta. The fair values of these financial instruments approximate their carrying amounts.

7. Commitment:

At March 31, 2006, the Foundation was committed to future operating lease payments for office premises, expiring August 31, 2012, in the following amounts:

8. Amendment:

The Foundation made amendments to the 2005 comparative figures as follows:

Revenue and accounts receivable were adjusted to include interest revenues that were collected subsequent to year-end.

The above amendments result in an increase in the opening balance of unrestricted net assets, of $844,612 as at April 1, 2004. Interest revenue from lawyers’ general trust accounts and excess revenue over expenses increased by $367,564 for the year ended March 31, 2005. Interest receivable and unrestricted net assets increased by $1,212,176 as at March 31, 2005.

Archived Reports

Updated: September 2006