To the Board of Governors of Royal Roads University
We have audited the statement of financial position of Royal Roads University as at March 31, 2006, and the statements of revenue and expenses, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the University'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 Royal Roads University as at March 31, 2006 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.
Victoria, Canada May 12, 2006
Grant Thornton LLP Chartered Accountants
Third Floor 888 Fort Street Victoria, British Columbia V8W 1H8 T (250) 383-4191 F (250) 381-4623 E Victoria@GrantThornton.ca W www.GrantThornton.ca Canadian Member of Grant Thornton International
Royal Roads University Notes to the Financial Statements for the year ending March 31, 2006 Note 1 – Authority and Purpose Royal Roads University operates under the authority of the Royal Roads University Act, Province of British Columbia. The University is a Board-governed undergraduate and graduate degree granting institution dedicated solely to studies and research activities that support the applied and professional fields. Under the Income Tax Act, the University is exempt from income taxes. Note 2 – Significant Accounting Policies a) General
These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. b) Recognition of Revenue
Tuition and other student revenues are recognized on a pro rata basis, based on course credits completed by the year-end. Operating grants are recognized when receivable. Revenues received for the provision of goods and services by the University are recognized in the period in which the goods are provided or the services are rendered. The University follows the deferral method of accounting for contributions. Externally restricted non-capital contributions are deferred and recognized as revenue in the period in which the related expenses are incurred. Externally restricted amounts must be used for the purposes designated by the external parties. Externally restricted capital contributions for the acquisition of capital assets are recorded as deferred contributions until the amount is invested in capital assets (see note 8). Once the amount is invested, it is transferred to unamortized deferred capital contributions. Unamortized deferred capital contributions are recognized as earned revenue over the remaining useful life of the related capital assets (see note 9). Donations of materials and services that would have otherwise been purchased are recorded at their fair market value. Other gifts-in-kind are not recorded in these financial statements. c) Inventory
Inventories of merchandise held for resale are recorded at the lower of cost or net realizable value. d) Investments
Investments are recorded at cost plus interest earned or income attributed in the period.
Royal Roads University Notes to the Financial Statements for the year ending March 31, 2006
Note 2 – Continued e) Capital Assets...