Longtime devotees of the Vancouver Folk Music Festival, including former staff and performers, have banded together to try to save the event.
“We feel that this haste to dissolve the society is not appropriate,” the group states on a new Facebook page. “It is easy to dissolve a society, but much more difficult to establish one, especially with charitable status.
“Long-term public funding relationships will end, the volunteer organization—the heart of the festival—will vanish, and the image of the festival will be forever tarnished,” it adds.
Those trying to save the festival include Anne Blaine, Bob Bossin, Roger Brant, Roddy Campbell, Valdine Ciwko, Audrey Cook, Jordana Corenblum, Gary Cristall, Ken Daskewech, Suzanne Fournier, Patty Gibson, Michael Goodman, John Greenaway, Stephen Harrison, Carol Herter,Veda Hille, Frank Hoorn, Jessie Johnson, Gwen Kallio, Peter Kidder, Kris Klaasen, Connie Kuhns, Linda McNeill, Lucie McNeill, Rod Mickleburgh, Art Moses, Miriam Moses, Naomi Nattrass Moses, Amy Newman, Sharon Tamaro, Lesley Thompson, and Gordon Watson.
On February 1, members of the Vancouver Folk Music Festival Society will vote on a board recommendation to dissolve the society.
The board has said that it will require an additional $500,000 up-front every year to pay suppliers.
“From long-time suppliers being out of business, to cost increases, to many providers now requiring payment up front, it was a herculean task to produce the 2022 festival,” the board said in a statement on the festival website. “In fact, we were only able to produce the event because of special COVID-relief grants that were available to organizations like ours last year.”
Financial statements show $24,891 deficit
Meanwhile, Pancouver has examined the Vancouver Folk Music Festival Society’s financial statements for the year ending August 31, 2022.
The society listed an annual deficit of $24,891 on total revenue of $1,940,139. Ticket sales accounted for $899,190 in revenue. Festival merchandise brought in $128,007 and concessions raised another $70,298.
In addition, the society received $841,658 through grants, fundraising and special events, and festival friends and donations.
The balance sheet reveals net assets of $160,992 by the end of the 2021-22 fiscal year, down from $185,883 the previous year.
Pancouver has previously reported that the society posted a $361,186 surplus over the first two years of the pandemic when annual festival in Jericho Beach Park had been cancelled.
In the fiscal year ending August 31, 2019 following that summer’s festival, the society reported a deficit of nearly $87,000 on revenue of $1,771,058. In the previous year, the festival posted a surplus of nearly $45,000 on revenue of $1,823,977.
The society’s most recent financial statements included a “qualified opinion” by MNP LLP Chartered Professional Accountants. This occurs in an auditor’s report when the accounting firm identifies a specific issue of concern.
Read the qualified opinion below
To the Members of Vancouver Folk Music Festival Society:
Report on the Audit of the Financial Statements
Qualified Opinion
We have audited the financial statements of Vancouver Folk Music Festival Society (the “Society”), which comprise the statement of financial position as at August 31, 2022, and the statements of operations, changes in net assets and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Society as at August 31, 2022, and its financial performance and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.
Basis for Qualified Opinion
In common with many not-for-profit organizations, the Society derives a portion of its revenue from donations, the completeness of which is not susceptible of satisfactory audit verification. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the Society and we were not able to determine whether any adjustments might be necessary to donation revenue, excess (deficiency) of revenue over expenses, net assets and cash flows from operations for the year ended August 31, 2022, and August 31, 2021.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Society in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Society’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Society or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Society’s financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Society’s internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Society’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Society to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Report on Other Legal and Regulatory Requirements
As required by the Society Act of British Columbia, we report that, in our opinion, these principals as described in Note 2 have been applied on a basis consistent with that of the preceding year.
MNP LLP Chartered Accountants
Read Note 2 in the financial statements below
2. Significant accounting policies
The financial statements have been prepared in accordance with Canadian accounting standards for not-for-profit organizations set out in Part III of the CPA Canada Handbook – Accounting, as issued by the Accounting Standards Board in Canada and include the following significant accounting policies:
Capital assets
Purchased capital assets are recorded at cost, with amortization provided using the declining balance method at rates intended to amortize the cost of assets over their estimated useful lives.
Rate
Computer equipment 30 %
Site equipment 20 %
Long-lived assets
Long-lived assets consist of capital assets. Long-lived assets held for use are measured and amortized as described in the applicable accounting policies.
The Society writes down long-lived assets held for use when conditions indicate that the asset no longer contributes to the Society’s ability to provide goods and services. The asset are also written-down when the value of future economic benefits or service potential associated with the asset is less than its net carrying amount. When the Society determines that a longlived asset is impaired, its carrying amount is written down to the asset’s fair value.
Revenue recognition
The Society follows the deferral method of accounting for contributions. Restricted contributions, are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured.
Festival and concert revenue is recognized as revenue in the period of the event, if the amount to be received can be reasonably estimated and collection is reasonably assured.
Contributed services
Contributions of services are recognized both as contributions and expenses in the statement of operations when a fair value can be reasonably estimated and when the services are used in the normal course of the Society’s operations and would otherwise have been purchased. Volunteers contribute an indeterminate number of hours per year to the Society in presenting the festival each year. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements.
Foreign currency translation
These financial statements have been presented in Canadian dollars, the principal currency of the Society’s operations. Transaction amounts denominated in foreign currencies are translated into their Canadian dollar equivalents at exchange rates prevailing at the transaction dates. Carrying values of monetary assets and monetary liabilities reflect the exchange rates at the statement of financial position date. Gains and losses on translation or settlement are included in the determination of excess (deficiency) of revenues over expenses for the current period.
Government assistance
Government assistance relating to loans is recognized at the time of the grant date when a portion of the loan agreement is forgivable and the Society continues to meet certain requirements specified at the time when the loan agreement was granted.
Government assistance relating to subsidies is recorded as revenue in the period to which the subsidy applies once there is reasonable assurance that the Society will meet the eligibility criteria, the government support will be received and the amount to be received is measurable.
Measurement uncertainty (use of estimates)
The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Accounts receivable are stated after evaluation as to their collectability and an appropriate allowance for doubtful accounts is provided where considered necessary.
Amortization is based on the estimated useful lives of capital assets.
Included in revenue is government assistance for the Canada Emergency Wage Subsidy. Management has estimated and calculated the amount of subsidy based upon their assessment of qualifying expenditures. The variability between actual subsidy received has not varied from the estimated subsidy. Legislative changes in the near term could have a material impact on the amounts recognized.
By their nature, these judgments are subject to measurement uncertainty, and the effect on the financial statements of changes in such estimates and assumptions in future years could be significant. These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in excess (deficiency) of revenues over expenses in the years in which they become known.
Financial instruments
The Society recognizes financial instruments when the Society becomes party to the contractual provisions of the financial instrument.
Arm’s length financial instruments
Financial instruments originated/acquired or issued/assumed in an arm’s length transaction (“arm’s length financial instruments”) are initially recorded at their fair value.
At initial recognition, the Society may irrevocably elect to subsequently measure any arm’s length financial instrument at fair value. The Society has made such an election during the year.
The Society subsequently measures investments in equity instruments quoted in an active market and all derivative instruments, except those designated in a qualifying hedging relationship or that are linked to, and must be settled by delivery of, unquoted equity instruments of another entity, at fair value. Investments in equity instruments not quoted in an active market and derivatives that are linked to, and must be settled by delivery of, unquoted equity instruments of another entity, are subsequently measured at cost less impairment. With the exception of financial liabilities indexed to a measure of the Society’s performance or value of its equity and those instruments designated at fair value, all other financial assets and liabilities are subsequently measured at amortized cost.
Transaction costs and financing fees directly attributable to the origination, acquisition, issuance or assumption of financial instruments subsequently measured at fair value are immediately recognized in excess (deficiency) of revenue over expenses. Conversely, transaction costs and financing fees are added to the carrying amount for those financial instruments subsequently measured at cost or amortized cost.
Financial asset impairment
The Society assesses impairment of all its financial assets measured at cost or amortized cost. The Society groups assets for impairment testing when available information is not sufficient to permit identification of each individually impaired financial asset in the group. Management considers whether the issuer is having significant financial difficulty; whether there has been a breach in contract, such as a default or delinquency in interest or principal payments in determining whether objective evidence of impairment exists. When there is an indication of impairment, the Society determines whether it has resulted in a significant adverse change in the expected timing or amount of future cash flows during the year.
The Society reduces the carrying amount of any impaired financial assets to the highest of: the present value of cash flows expected to be generated by holding the assets; the amount that could be realized by selling the assets at the statement of financial position date; and the amount expected to be realized by exercising any rights to collateral held against those assets.
Any impairment, which is not considered temporary, is included in current year excess (deficiency) of revenue over expenses.
The Society reverses impairment losses on financial assets when there is a decrease in impairment and the decrease can be objectively related to an event occurring after the impairment loss was recognized. The amount of the reversal is recognized in excess (deficiency) of revenue over expenses in the year the reversal occurs.
