18. FINANCIAL INSTRUMENTS AND EXPOSURE TO RISK Credit risk: Credit risk is the risk <strong>of</strong> financial loss to the <strong>Gallery</strong> associated with counterparty’s failure to fulfill its financial obligations and arises principally from the <strong>Gallery</strong>’s accounts receivable and its investments in money market funds. The <strong>Gallery</strong> is subject to credit risk on the value <strong>of</strong> its trade accounts receivable $938,400 and on its cash equivalents $11,159,700. The <strong>Gallery</strong> has determined that the risk is not significant. a) Accounts receivables The <strong>Gallery</strong> is exposed to credit risk from customers in normal course <strong>of</strong> business. The accounts receivable are net <strong>of</strong> applicable allowance for doubtful accounts, which is established based on specific risk associated with individual clients and other relevant information. Of the accounts receivable, $2,362,131 consists <strong>of</strong> appropriations receivable from the Government. Concentration <strong>of</strong> credit risk is limited because a large part <strong>of</strong> revenue is from reputable organizations such as other government departments, universities, schools, museums, etc. The <strong>Gallery</strong> manages this risk by closely monitoring the issuance <strong>of</strong> credit to commercial clients. b) Investments The <strong>Gallery</strong> manages its exposure to credit risk arising from investments by following its investment policy which limits the <strong>Gallery</strong>‘s investments to cash equivalents thereby significantly lowering credit risk. The cash equivalents consist <strong>of</strong> units in money market funds whose objective is to earn interest income while preserving capital and maintaining liquidity. The sums are invested in treasury bills or other debt obligations <strong>of</strong>, or guaranteed by the Canadian federal, provincial or municipal governments, Canadian chartered banks, Canadian loan or trust companies or Canadian corporations. Liquidity risk: Liquidity risk is the risk that the <strong>Gallery</strong> will not be able to meet its financial obligations as they fall due. The <strong>Gallery</strong> manages liquidity risk through the management <strong>of</strong> its cash and cash equivalents and capital. The <strong>Gallery</strong> has determined that the risk is not significant. Market risk: Market risk is the risk that changes in market price, such as foreign exchange rates and interest rates, will affect the <strong>Gallery</strong>’s income or the value <strong>of</strong> its holdings <strong>of</strong> financial instruments. The <strong>Gallery</strong> has determined that the risk is not significant. a) Foreign currency risk The <strong>Gallery</strong> operates primarily within <strong>Canada</strong>, but in the normal course <strong>of</strong> operations, the <strong>Gallery</strong> is party to exchange <strong>of</strong> exhibitions and collections on an international basis, as well as holding cash denominated in foreign currencies. The currencies in which these transactions occur are primarily denominated in Canadian and US dollars, and the Euro. The <strong>Gallery</strong> is exposed to foreign currency risk on revenue and cash principally denominated in US dollars and in Euros, and on accounts payable in various denominations. The <strong>Gallery</strong> does not hedge its exposure to fluctuations in the value <strong>of</strong> the US dollar. As at March 31, <strong>2009</strong>, the <strong>Gallery</strong>’s cash includes $49,519 in US dollars ($62,384 Canadian), and 5,985 Euros ($8,873 Canadian). The liabilities include accounts payable totaling $28,105 in US dollars ($35,750 Canadian). The approximate impact <strong>of</strong> a 10% rise in the Canadian dollar compared to the US dollar on these exposed balances at March 31, <strong>2009</strong> is a $1,800 decrease in net income. The approximate impact <strong>of</strong> a 10% decline in the Canadian dollar compared to the US dollar on these balances at March 31, <strong>2009</strong> is a $1,800 increase in net income. A sensitivity <strong>of</strong> 10% has been selected as this is considered reasonable given the current level <strong>of</strong> exchange rates and the volatility observed on an historical basis and market expectations for future movement <strong>of</strong> the Canadian and US dollar. b) Interest risk The <strong>Gallery</strong> is subject to interest rate risk on its cash equivalents. The interest income generated by the money market funds varies from year to year. The <strong>Gallery</strong>’s exposure to interest rate fluctuations is limited to money market changes. The risk is not significant due to the short term nature <strong>of</strong> the investments. If interest rates were 1% lower during the year, the interest revenue from cash equivalents would have been approximately $150,000 lower. Fair value: The carrying value <strong>of</strong> cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximates their fair value due to the short-term maturity <strong>of</strong> these financial instruments. 88 Financial Statements
19. CONTINGENCIES In the normal course <strong>of</strong> its operations, various claims and lawsuits have been brought against the <strong>Gallery</strong>. Some <strong>of</strong> these potential liabilities may become actual liabilities as an outcome <strong>of</strong> these actions. In the event that management concludes that such losses were likely to be incurred, an estimated liability is accrued and an expense recorded in the <strong>Gallery</strong>’s financial statements, based on management’s best estimates. The effect, if any, <strong>of</strong> ultimate resolution <strong>of</strong> these matters will be accounted for when determinable. 20. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform to the current year’s presentation. 89
- Page 1 and 2:
Annual Report 2008-09 National Gall
- Page 3 and 4:
Annual Report 2008-09 National Gall
- Page 5 and 6:
Distinct values Accessibility. Prog
- Page 7 and 8:
A Word from the Chairperson, Board
- Page 9 and 10:
Letter from the Director Marc Mayer
- Page 11 and 12:
Supporting Friends and Donors of th
- Page 14:
Bringing Canada to the World and th
- Page 18 and 19:
The Gallery’s family of websites
- Page 20:
“We live in a time of the created
- Page 24:
Rescued from the Vault The Gallery
- Page 27 and 28:
Top right: The exhibition Bernini a
- Page 29 and 30:
Rodney Graham Canadian, born 1949 T
- Page 31 and 32:
Robert Field British, c. 1769-1819
- Page 33 and 34:
Barbara Morgan American, 1900-1992
- Page 35 and 36:
33 Jean Benoît Canadian, born 1922
- Page 37 and 38:
35 Emily Carr Canadian, 1871-1945 A
- Page 39 and 40: Board of Trustees 1 April 2008 to 3
- Page 41 and 42: Senior Management and Managers Seni
- Page 43 and 44: Gifts to the Library included a fin
- Page 45 and 46: The web-accessible Archives databas
- Page 47 and 48: During the same period, the Canadia
- Page 49 and 50: Education Priority: Offer a rich ca
- Page 51 and 52: Communications Priority: Enhance ma
- Page 53 and 54: • Installation of remote surveill
- Page 55 and 56: Revenue Generation Priority: Increa
- Page 57 and 58: Phillips, Paulette (born 1956) The
- Page 59 and 60: Favell, Rosalie (Métis, born 1958)
- Page 61 and 62: Photographs Gifts Gerdes, Etta (Ger
- Page 63 and 64: Levinstein, Leon (American, 1908-19
- Page 65 and 66: LOANS - NATIONAL GALLERY OF CANADA
- Page 67 and 68: Quebec Musée national des beaux‐
- Page 69 and 70: NEW YORK New York Americas Society
- Page 71 and 72: Real Life: Ron Mueck and Guy Ben-Ne
- Page 73 and 74: Certain operating costs have increa
- Page 75 and 76: Financial Statements 2008 2009 73
- Page 78 and 79: Balance Sheet as at 31 March (in th
- Page 80 and 81: Statement of Comprehensive Income F
- Page 82 and 83: 2. SIGNIFICANT ACCOUNTING POLICIES
- Page 84 and 85: 3. Changes in Accounting Policies (
- Page 86 and 87: 8. ACCOUNTS PAYABLE AND ACCRUED LIA
- Page 88 and 89: 14. CAPITAL MANAGEMENT The Gallery
- Page 92 and 93: Schedule of Operating Revenue and C
- Page 94: Letter from the Chair of the Board
- Page 98: Throughout the year, we had the gre
- Page 101 and 102: BOARD OF DIRECTORS Chair Thomas P.
- Page 103 and 104: Tyler Family Charitable Foundation
- Page 105 and 106: KPMG s.r.l. Comptables agréés 160
- Page 107: Photo Credits All photographs have
Change language